Closing costs are the fees associated with finalizing your mortgage and real estate transaction. In Arizona, these typically range from 2% to 5% of the home's purchase price. These costs are in addition to your down payment.
For buyers, common closing costs include lender fees (like origination and underwriting), appraisal fees, title insurance policies for both the lender and the owner, escrow fees, and prepaid expenses.
Prepaid expenses are costs you pay at closing for services you'll use in the future, such as property taxes and homeowners' insurance, which are held in your escrow account.
Sellers also have closing costs, including the real estate agent commissions, title and escrow fees, and any prorated property taxes.
It's important to review your Loan Estimate carefully, which will outline your estimated closing costs. You can sometimes negotiate for the seller to contribute towards these costs as part of your purchase agreement.