Fees typically paid for Arizona purchases are 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. The following summarizes the fees you can expect:
Buyer Expenditures
Loan Costs: Lenders typically change at 1% (of the loan value) origination fee which is paid at close of escrow. The origination fee covers the lender’s administrative costs in processing the loan. Points (a loan surcharge) can also be assessed. Other loan-related fees include an appraisal, a credit report fee and any other fees that SHOULD be disclosed by the lender at loan application.
Title Insurance: A buyers title insurance policy insures clear title to the property with the title company taking future responsibility for claims against that title. This is typically paid by the seller. The buyer is responsible for the lender’s title policy which protects the lender against loss due to defects on title.
Misc Title Charges: 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, title search, title examination and notary fees.
Settlement or Closing 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 with the second half due March 1st and delinquent May 1st. 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 back 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.
Prepaid Interest: Depending on what day of the month you close your charge could vary from a few days interest to a full month.
Closing Notes
Impound Account (Escrow/Reserve Account): Typically the lender will set up an escrow account where your property taxes, mortgage insurance and property (hazard) insurance will be collected and held.
Title Insurance: Before closing on a property you will need to know the recorded liens, encumbrances and easements are in effect on that property. Title will also indicate the vested owner of record and any restrictions on the use of that property. Title insurance protecting the buyer will typically be paid by the seller. The buyer will be required to furnish the lender with a lender’s policy showing the lender as a lien holder on that property. These policy charges will be paid at closing. Once closing and recording of documents has occurred the title company will issue a title insurance policy to you and the lender showing clear title to the property.
Preparing for Close: Bring acceptable photo I.D. to the closing along with a cashier’s check (payable to the title company) for the remainder of your down payment.
Unlike many states and Canada, attorneys are not typically involved during residential real estate transactions in the state of Arizona. Transactions are managed entirely by title companies. 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.
