Arizona Home Buyer's Guide - Common Closing Costs for Both Buyers & Sellers


What Are Closing Costs and Who Pays for Them?

The various fees associated with buying or selling a home are called closing costs. Buyers and sellers both pay closing costs but who pays for what can vary.

Buyers typically pay the following closing costs: 


  • Title insurance; the fees associated with taking out a mortgage; inspection fees; a homeowner's insurance premium (must be prepaid for one year at closing); escrow or settlement preparation fees; proration of mortgage interest and property taxes; a tax service fee; flood certification; transfer taxes and HOA fees, if there are any (although the seller may pay these or they may be shared 50/50 between buyer and seller); attorney's fees; a home warranty premium; miscellaneous documentation preparation fees and recording fees.

Sellers' closing costs typically include:


  • Loan payoff fees and prepayment penalties on existing mortgages and other liens against the property; the Professional Fees/Real Estate commission; title insurance (depending on the location); termite inspection and termite repairs (this is negotiable in some areas); all or part of transfer taxes and escrow fees, if there are any; other fees set by local custom or negotiated during the transaction; other repair work agreed to in the purchase contract; a home warranty premium; proration of property taxes; attorneys fees; any credits the seller has agreed to give to the buyer at closing; and miscellaneous documentation preparation and recording fees.  

First Time Tips

Don't wait until your home sale is closing to find out how much your closing costs will run. If you're selling, the agent who prepares a comparative market analysis for you can calculate an estimate of your closing costs. To find out what charges will be levied by your mortgage lender, call the lender directly. Buyers should ask their mortgage broker or real estate agent to give them a list of the approximate closing costs they can expect to pay. 

Also, in a hot seller's market, your offer may not be competitive if you ask the sellers for a credit for your nonrecurring closing costs. In this case, you may want to increase the offer price to compensate the sellers for the amount of the closing cost credit.


Finally, the lender must disclose a good faith estimate of all settlement costs. A check to cover your closing costs will probably have to be a cashier’s check and the title company or other entity conducting the closing will tell you the required amount for:



  • Down payment


  • Loan origination fees


  • Points or loan discount fees you pay to receive a lower interest rate


  • Appraisal fee


  • Credit report


  • Private mortgage insurance premium


  • Insurance escrow for homeowners insurance, if being paid as part of the mortgage


  • Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or taxes for you.


  • Deed recording fees


  • Title insurance policy premiums


  • Surveys


  • Inspection fees, building inspection, termites, etc.


  • Notary fees


  • Prorations for your share of costs such as utility bills and property taxes



A Note About Prorations. Because such costs are usually paid on either a monthly or annual basis, you might have to pay a bill for services used by the sellers before they moved. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance. For example, the gas company usually sends a bill each month for the gas used during the previous month. But assume you buy the home on the 6th of the month. You would owe the gas company for only the days from the 6th to the end of the month. The seller would owe for the first 5 days. The bill would be prorated for the number of days in the month, and then each person would be responsible for the days of his or her ownership.





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