Are you thinking of putting down stakes in the Grand Canyon State? As you may already know, Arizona is one of the most affordable states in the country. This is precisely why so many people are interested in buying homes in Arizona. If you’re looking to purchase a home here, it’s important to go into the process with an understanding of all of the costs that are involved.
While you may be familiar with things like down payments and closing costs, you may not be aware of all of the other smaller costs that go into a buyer’s budget. Let’s cover some of the core costs to expect when buying a home in Arizona.
Costs to Plan for Before You Buy Your Arizona Home
Your Earnest Money Deposit
Once you make an offer, you’ll place your deposit money in escrow during your contract period. While deposits vary by home, you can usually expect to put a minimum of $1,000 into escrow.
The good news is that the money you use for your deposit will go toward the purchase of your home if the contract moves forward.
You Home Inspection
Hiring an inspector to conduct a home inspection is a must when purchasing a home in Arizona. Your inspection will give you detailed information about the condition of your home based on an expert third-party analysis. This includes structural, mechanical, and cosmetic issues. An inspection is truly an investment that protects your best interests.
Your Appraisal
Your mortgage lender will require you to obtain an appraisal to determine your home’s value. Appraisals look at factors like a home’s condition, a home’s location, and recent home sales in the area to come up with a value. If an appraisal is different from your offer price, you’ll need to work with your real estate agent to try to salvage the deal.
Closing Costs to Cover When Buying Your Arizona Home
You can expect your down payment to be the biggest expense you put toward purchasing your own home. While your actual down payment will vary based on lender requirements, you can typically expect to put down between 3 percent and 20 percent at closing. If you qualify for VA and USDA loans, you may walk away with putting 0 percent down at closing. Putting down a larger down payment reduces the size of your loan.
Loan Fees/Origination Charges
Your lender will charge you various fees for services that are attached to your loan. This can include your origination fee, underwriting fee, processing fee, administrative fee, and application fee. You may also choose to pay for “discount points” on your loan that lower your interest rate.
Third-Party Fees
During the closing process, you will likely employ the services of a title company, escrow company, and attorney. Your specific closing arrangements may require even more people to be involved. These services all ultimately come with costs for recording fees, title-related fees, and more.
Prepaid Costs
At closing, you may be required to pay some costs for your new home in advance. This commonly includes the annual premium for your homeowner’s insurance, your premium for mortgage insurance, and prepaid interest. If you’re moving into one of Arizona’s lovely communities, you may also be required to pay HOA fees for your neighborhood association.
You may also have to pay property taxes on your new home. In Arizona, property taxes are collected every six months in March and October. Typically, depending on when you move into your home, you will be required to prepay property taxes up to the next due date. This is normally anywhere between two and six months’ worth of property taxes.
Let Us Walk You Through It All
While these costs may seem like a lot all at once, the closing process is a step-by-step process that allows you to organize your payments. You’re likely to find many opportunities to reduce your mortgage payments to actually save a substantial amount of money during the life of owning your home. When you’re ready to dive into your search for a beautiful Arizona home, Stevens Realty is here to help you! Reach out to Keith and Janna today
We are Keith and Janna Stevens, and we’ve been in the realtor game for years now. We’ve learned a lot along the way and want to share that experience with you. Enjoy our blog, and when you’re ready to buy or sell your home, be sure to reach out to us!