How Much Are Closing Costs in Arizona 2024?

It’s no secret that buying a home is a huge financial decision, and there’s a lot more to consider than just the price of the home. Another major expense to consider when you’re buying a home is how much closing costs will be.

Closing costs are the fees and expenses associated with finalizing a real estate transaction and transferring ownership of a property from the seller to the buyer. To help prepare you for the final steps of the homebuying process, this Redfin article will break down how much closing costs are in Arizona, who pays for them, and what costs you can expect to pay as a buyer and as a seller.

How much are closing costs in Arizona?

In addition to the down payment, homebuyers will also need to pay closing costs before securing the keys to their new home. Closing costs in Arizona typically range from 2%-5% of the home’s purchase price. However, keep in mind that closing cost amounts vary depending on several factors, such as the buyer’s loan program or negotiations made with the seller.

For example, if you’re buying a home in Tucson, which has a median sale price of $335,990, closing costs could range anywhere from $6,720 to $16,800. Or, let’s say that you’re buying a home in Phoenix, which has a median sale price of $463,000. Closing costs for a home here could range from $9,260 and $23,150.

Who pays closing costs in Arizona?

In most areas, including Arizona, both the buyer and the seller will pay closing costs. But the buyer and seller will pay for different closing costs and likely have different total closing cost amounts. Keep in mind that it’s common for the buyer to pay closing costs out of pocket, while the seller’s closing costs are typically deducted from the home sale proceeds.

Buyer closing costs in Arizona

For homebuyers in Arizona, you can expect closing costs to range 2%-5% of the purchase price. In most cases, you’ll pay earnest money, typically 1% to 3% of the home price, upon reaching mutual acceptance in your home purchase. This deposit is subtracted from your closing costs, reducing the total amount due at closing. Here are a few common closing costs that buyers typically cover:

Appraisal fee: Your mortgage lender will require a home appraisal to ensure the home value is equal to or more than the loan amount. Home appraisals typically cost between $300 and $500, depending on location. If you pay at the time of service, it will not be included in your closing costs.
Inspection fee: Although not required, a home inspection is highly recommended. Home inspections generally range from $300 to $500 in cost and are usually paid at the time of service. However, if not, it will need to be paid at closing.
Loan origination fee: Most lenders charge a fee for creating your loan. Be sure to check with your lender what this fee covers and if it can be waived or negotiated.
Loan processing fee: Lenders may also charge a loan processing fee, covering underwriting and related services. Similar to the origination fee, check with your lender to understand its purpose and possible waivers.
Loan discount points: If you’ve purchased points to lower your interest rate, you’ll usually pay a one-time fee at closing. Each point can lower your rate by 0.25% to 0.5%. Consider your long-term plans, such as how long you plan to own the home or if you plan to re-finance, before purchasing points.
Private mortgage insurance (PMI): Required for down payments under 20%, PMI might involve an upfront fee at closing, depending on the loan type. It’s usually part of your monthly payment, but some loans offer the option to pay it as a one-time fee.
Title insurance: Title insurance is a one-time fee paid as part of closing costs. Buyers typically cover both lender and owner title insurance policies.
Homeowners insurance: Your annual homeowners insurance premium may be included in your closing costs in Arizona.
Homeowners Association dues: If your property is part of a homeowners association, you’ll likely pay one month’s dues upfront at closing. These fees vary and contribute to maintenance and operational costs.
Property taxes: As part of closing costs in Arizona, you may be required to prepay a portion of your property taxes at closing.

Seller closing costs in Arizona

How much closing costs are in Arizona for sellers will vary between each transaction, but here are some of the common fees and costs covered by sellers:

Real estate agent commission fees: These fees can be a significant cost for sellers. Commission fees may vary and are subject to negotiation. Sellers should discuss their options with their agent.
Homeowners Association fees: If the property is part of an HOA, the seller may need to pay a variety of fees. These can include HOA transfer fees, outstanding dues, and possibly a fee for obtaining HOA documents required by the buyer. The exact fees will depend on the HOA’s rules and regulations.
Property taxes: Any outstanding property taxes will be due at this time. However, if the seller has prepaid property taxes for the period that extends beyond the closing date, they may be credited back for the portion they’ve paid but won’t use.
Title insurance: As part of closing costs for sellers in Arizona, sellers may pay for owner’s title insurance. Typically, this cost is based on the home’s sale price.
Transfer taxes: In Arizona, sellers are responsible for paying state and possibly local transfer taxes. These taxes are typically a percentage of the property’s sale price and can vary widely by jurisdiction.

Median home sale price data from the Redfin Data Center during July 2024.

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