Closing Costs for Home Buyers

Closing costs is a term many buyers find confusing. Even though you knew you’d need a substantial down payment and moving expenses, you may never have imagined you’d be paying out-of-pocket thousands more dollars in service fees and expenditures known as closing costs. Following is an explanation of such costs.

💲 What Are Closing Costs?

Closing costs are the service fees accumulated during the transaction process such as fees for lenders, escrow agents, appraisers, inspectors, notaries other service providers. The service providers engage in the work without direct pay with the understanding that their fee will be paid on the closing day. In addition to such costs, prorations to the close date of property taxes and HOA fees could also increase the “costs” required to close the transaction.

👤 Who Pays Closing Costs?

In most cases, it’s the buyer who assumes the responsibility of paying closing costs. However, it’s not uncommon for closing costs to be negotiated. As a condition in the purchase contract, the seller may agree to pay part or all of the closing costs out of proceeds from the sale, as opposed to the buyer paying those costs

💵 How Much are Closing Costs?

Closing costs are typically in the range of one to two percent of the sale price. When you apply for your loan, your lender will supply you with an estimated total of closing costs. At least three days before close, the lender provides a list of actual costs that will be due at closing.


📅 When Are Closing Costs Due?

real estate agent handing house keys to coupleThe total cash to close is due on or before the close date.


📝 Closing Costs and Home Loans

Typically, closing costs are not included in your home loan. However, some lenders have conditions in which your closing costs can be folded into your home loan.

This list is far from complete. Other costs could include homeowner’s insurance, property taxes, private mortgage insurance, and more.

😃 Conclusion

Closing costs can come as a shock. Please don’t hesitate to contact TNT for any questions or concerns you may have at:  602-931-1010  or

💡 Terms and Concepts

Loan officer:  When you apply for your home mortgage loan, there’s a loan officer who assists in filling out the application, gathering the appropriate documents, ordering the credit report, and submitting the loan package for review. That loan officer’s fee is included in the closing costs.

Credit Report:  The loan officer orders a copy of your credit report from the credit reporting agencies. Each agency charges a fee, which the lender pays up-front and then recovers in closing costs.

Loan Processor or Underwriter:  When the loan is approved, the loan processors or underwriters generate the legal documents and contracts associated with the funds being borrowed by the buyer.

Escrow Agent:  The escrow agent is a third-party professional who oversees the documents, funds, and processes of your real estate transaction.

Title Check:  Before a house can be sold, its title has to be checked for tax hold or liens. In Arizona, this is done by the Title/Escrow company.

Title Transfer:  In Arizona, title/ownership is transferred by recording sale documents with the County Recorder, who charges a nominal fee for that service.

Lawyer:  Very rarely in Arizona, it may be required or preferred to have a lawyer review all real estate contracts.

Surveyor:  The survey determines the property lines of the house you’re buying. Also rare for the bulk of Arizona real estate sales.

Appraiser:  The appraisal assesses the property to provide an estimated current market value to the lender.

Inspector:  For nearly 100% of home sales, the buyer hires an inspection company to examine in detail and report what the condition of the property is.

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