The Costs of Buying a Home in Arizona

Buying a home in the Arizona is one of the best decisions you'll ever make, but in the current economic climate, it's important to know what costs are involved. Some might wonder if it is even possible for them to afford a home with increasing prices and interest rates. In this article, I outline the major costs that you should take into account during the home purchasing process. Hopefully, these will make you a more educated buyer and give you the confidence to purchase your dream home. 

Home Price: This is often the most important item of information, as it determines almost every other pricetag in the transaction. Ultimately, you should find a price range that makes the most sense with your current income, savings, and other financial circumstances. 

Down Payment: This is your entry fee to owning a home. It's a percentage of the purchase price, and here in the Arizona desert, it can range anywhere from a humble 3% to a princely 20% or more. When it comes to financing your home in Arizona, you have a range of loan options to consider. These include conventional loans with down payments as low as 3%, government-backed loans like FHA and VA offering low or no down payment options, and specialized programs like USDA loans for rural areas and jumbo loans for high-value properties.

Mortgage Loan Origination Fees: These fees, often ranging from 0.5% to 1% of your loan amount, are charged by the lender to initiate your mortgage and help you chart your financial course, providing you with the essential map for your homeownership journey.

Appraisal Fee: This cost, typically falling between $450 to $650, ensures that the property's value aligns with your funding and is an essential step in your home purchase journey, safeguarding you from overpaying for your chosen path.

Home Inspection: A professional home inspection typically costs around $300 to $600, depending on the size and complexity of the property. It provides a comprehensive assessment of the property's condition before purchase.

Title & Escrow Fees: These expenses typically range from .5% to 1% of the purchase price of the home. For instance, for a $500,000 home, you might expect closing costs of $2,500 to $5,000.  Fees such as title insurance, attorney or escrow fees, recording fees, and homeowner association transfer fees, add to the overall cost of purchasing a home.

Property Taxes: Property tax rates vary by location and can range from 0.25% to 2% of the property's assessed value annually. For a $500,000 home, this could mean annual property taxes ranging from $2,000 to $3,000, impacting your ongoing expenses.

Homeowners Insurance: The cost of homeowners insurance can vary based on factors such as coverage level and property value. On average, it ranges from $500 to $2,000 per year, depending on the quality of coverage, and cost to rebuild the home from scratch.

Private Mortgage Insurance (PMI): The cost of PMI varies depending on your loan amount, but it typically adds a few hundred dollars to your annual mortgage expenses if your down payment is less than 20%.

Homeowner Association (HOA) Dues: HOA dues vary widely, from as low as $50 to $500 per month, depending on the community and the services provided. Typically, more amenities such as pools, grassy parks, walking paths, social clubs, and golf courses are going to push the price the highest.

Moving Costs: The cost of moving varies based on your chosen approach, whether it involves hiring professional movers, renting transportation, or purchasing supplies. It can range from a few hundred dollars to several thousand dollars.  Right now you can rent a truck for less than $50 per day.  To move out of state will put you in the $1,000+ range.

Utility Deposits/Transfers: Establishing essential utilities like electricity, water, and gas may require deposits and transfer fees, which can vary depending on your location and utility providers. Be prepared for initial costs to set up your new home.

In Arizona's real estate market, homebuyers need to take into account the various costs that come with their purchase. We've talked here about most of these costs, from the initial down payment to ongoing property taxes. Understanding these expenses empowers you to make informed decisions as you consider your options in the magnificent Grand Canyon State.