The fees that you can expect to pay for your Arizona purchase are very competitive nationally and will range from approximately 1% of the purchase price for a non-financed (all cash) purchase to 3%+ (depending on loan fees) for a financed purchase. These fees include loan fees that need to be negotiated with your lender, escrow fees, title insurance, impounds for HOA and insurance, property taxes and miscellaneous smaller fees. Financed properties will require an appraisal which will cost an additional $350-400 (for cash buyers an appraisal is discretionary) and you may opt for a home inspection which can cost $400-500+. The following summarizes the major fee expenditures:
LOAN COSTS
Lenders typically change at 1% (of the loan value) origination fee which is paid at close of escrow. Points (a loan surcharge) can also be assessed. Other loan-related fees are an appraisal and a credit report fee.
TITLE INSURANCE
A buyers title insurance policy insures clear title to the property with the title company taking responsibility in the future for claims against that title.
ESCROW FEES
These are the fees paid at closing to the escrow company for facilitating the transaction including coordinating all signings, preparing and collecting documents and recording the deed.
HOA & INSURANCE IMPOUNDS
Typically impounds (money deposits) will be needed at close of escrow for at least a minimum 2 months’ payments for HOA and home insurance.
PROPERTY TAXES
In Arizona the first property tax installment is due October 1st and delinquent November 1st; the second half is due March 1st and delinquent May 1st. Only if the seller has paid taxes in full as of the date of the close then a pro-rated amount of these paid taxes will be paid over to the seller at close of escrow.
PROPERTY INSPECTION FEES
Termite inspections unless required by the lender are not mandatory but are recommended. Buyers may elect to conduct a home inspection at their own expense.
PRIVATE MORTGAGE INSURANCE
If applicable there may be an impound for a few months of PMI payments.
THE SMALL STUFF
Other fees which are typically charged at close of escrow are recording and notary fees, document preparation fee, tax service fee, homeowners association transfer fees, courier, underwriting fee and wire transfer fees.
Unlike many states and Canada, attorneys are not typically involved during residential real estate transactions. Transactions are managed entirely by escrow companies*. Of course if you retain the right to get the advice from and hire any professional services at your discretion before, during or after a close including an attorney, accountant or tax specialist.
For any more questions on loan and escrow specialists, the associated fees and direction to the various professionals involved feel free to contact us anytime.
*Title companies and title agents both handle closings. Conveyance of title is by warranty deed and a Deed of Trust is the security instrument most often used. Arizonans use ALTA owner’s and lender’s policies, standard or extended, with standard endorsements. The seller customarily pays for the owner’s policy, and the buyer pays for the lender’s policy and otherwise split escrow costs 50/50. The first property tax installment is due October 1st and delinquent November 1st; the second half is due March 1st and delinquent May 1st. Arizona is a community-property state.
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