Out Of Pocket Costs Buying a Home

Costs associated with buying a home in Arizona

When a home buyer embarks on their home buying mission, they often wonder what kind of costs they will incur.  More importantly, Arizona home-buyers are interested in finding out what “out-of-pocket” costs they will have to pay prior to closing.  Let’s break down both the total costs and the out-of-pocket costs associated with buying a Phoenix area home.

What are the Costs Associated with Buying a New Home?

There are 3 main categories of costs and/or charges that a home buyer will deal with when buying a new home in the desert.  Let’s take a look at each of these categories:

1. Lender Costs:  These are costs your mortgage lender charges.  They may include:
a. Processing
b. Underwriting
c. Doc Preparation
d. Closing Fee

2. Title Costs:  These are costs charged by the Title Company that is handling your transaction.  Title fees include:
a. Administrative fee
b. Owner’s Title Insurance (Only paid on purchases and in Arizona the seller typically pays for this fee)
c. Lender’s Tile Insurance
d. Endorsements

3.  Pre-paid taxes and Insurance:  These are not actual costs.  These charges are collected at closing and go to pay for the homeowner’s taxes and insurance.

All of these costs are collected at closing and not before.  They may be paid at closing by the homeowner/home buyer, seller or your mortgage lender.  If your mortgage lender pays for your costs you will pay a higher than market interest rate as a result.

What Out of Pocket Costs are Due at Closing?

There are 2 fees that a home buyer will pay out of their pocket prior to closing.  These fees include an appraisal fee and a home inspection fee.  While an appraisal is required (except for rare situations such as a Homepath loan) a buyer can opt out of obtaining and paying for a home inspection if they feel comfortable purchasing a home without one.

The cost of an appraisal runs between $350 to $550 depending on the type of purchase (owner occupied vs. investment property) and the size/price of a home.  Home inspections can cost anywhere from $300 to $700 or more.  This cost is determined by the size of the home and the scope/depth of the inspection.

Please call me or email me if you have any questions regarding what the costs associated.  As your Arizona Mortgage Lender I am here to help!

By Jeremy House



  1. Kudos. One of the biggest things we overcome is helping a buyer understand the costs involved with buying. Expecially FHA buyers and that confusion between 3.5% down payment and the approx 3% needed in closing costs/pre-paids.

    Found this while researching articles for clients on costs. Hope you are well. Great site!

Speak Your Mind