Staring at a down payment and wondering what else you’ll owe at the closing table? You’re not alone. Closing costs can feel vague until you see them line by line, especially if you’re buying in a new market like Prescott. In this guide, you’ll learn typical buyer costs, who usually pays what in Arizona, and how to get an exact number before you sign. Let’s dive in.
What closing costs are
Closing costs are the one‑time fees and prepaids you pay to finalize your home purchase. In Prescott and across Arizona, buyers commonly plan for about 2% to 5% of the purchase price. The final amount depends on your loan type, timing, negotiated credits, and title/escrow company fees. Treat this as a planning estimate and confirm with your lender and title company.
Who pays what in Prescott
Arizona follows a few local customs that shape your bottom line.
- Sellers commonly pay for the owner’s title insurance policy in Arizona, though this is negotiable and confirmed in the purchase contract.
- Escrow and closing are typically handled by a title/escrow company. Their fees vary by company and price point.
- Arizona does not have a statewide real estate transfer tax. Check for any local assessments specific to a property.
- HOA communities are common in parts of Prescott. Expect HOA transfer fees and prorations if you’re buying in an HOA.
Negotiation also matters. In a competitive market, sellers may resist concessions. In a buyer‑leaning market, sellers may contribute toward your costs. Your strategy should match current Prescott conditions.
Buyer closing cost breakdown
Loan and lender fees
- Origination or application fee: often 0.5% to 1.5% of the loan amount, or a flat fee.
- Discount points: optional prepaid interest to lower your rate. Each point equals 1% of the loan amount.
- Credit report and underwriting: smaller flat fees, with credit reports often under $50.
Appraisal and inspections
- Appraisal: typically about $400 to $900, higher for complex properties.
- Inspections: general home inspection, pest/termite, and optional sewer scope or septic/well inspections. Plan $300 to $800 per inspection depending on scope.
Title, escrow, and recording
- Lender’s title policy: required by most lenders and paid by you.
- Escrow/settlement fee: charged by the title/escrow company and sometimes split by contract.
- Recording fees: county charges for deed and mortgage documents, often $20 to $150 per document depending on what is recorded.
Prepaids and reserves
- Homeowner’s insurance: initial premium plus escrowed reserves, based on timing.
- Property tax reserves: lenders often collect several months up front to fund upcoming bills.
- Mortgage insurance or funding fees: PMI for conventional loans with smaller down payments, FHA upfront mortgage insurance, or a VA funding fee if you are using those programs. These may be financed or paid at closing depending on program rules.
HOA and local items
- HOA transfer and setup fees: common in HOA communities and typically a few hundred dollars. Prorated dues are also settled at closing.
- Yavapai County tax proration: taxes are prorated so each party pays their share for the time they owned the property.
- Utility deposits or local requirements: some properties may involve utility setup fees or local inspections, such as septic or well certifications.
Prescott examples to plan your budget
These examples use broad percentages to show scale. Your actual numbers will reflect your loan type, title fees, timing, and any negotiated credits.
- Example A: $350,000 purchase
- Buyer closing costs at 2% to 5%: $7,000 to $17,500
- Example B: $550,000 purchase
- Buyer closing costs at 2% to 5%: $11,000 to $27,500
- Example C: $800,000 purchase
- Buyer closing costs at 2% to 5%: $16,000 to $40,000
These are planning ranges only. Many line items are fixed dollar amounts in the hundreds to low thousands.
What changes your final number
- Loan program and points: FHA, VA, USDA, and conventional loans have different fees, mortgage insurance rules, and allowable seller concession limits.
- Timing of closing: your closing date affects tax and insurance prorations and the number of escrow months collected.
- HOA status: transfer fees and prorations apply in HOA communities and vary by association.
- Title and escrow fees: premiums are regulated in Arizona, but escrow and other fees vary by company and by transaction size.
- Market conditions: buyer or seller leverage in Prescott can influence concessions and who pays certain fees.
How to get your exact estimate
You can move from estimates to precise numbers with three steps.
- Request a Loan Estimate from your lender. After you apply, your lender must provide this within three business days. Use it to compare rates, points, and fees across at least three lenders.
- Ask a local title/escrow company for an itemized quote. Request a preliminary settlement estimate that includes escrow fees and both lender’s and owner’s title policies. Confirm who pays the owner’s policy in your contract.
- Review your contract with your Prescott agent. Clarify any seller concessions, HOA fees, and how escrow/settlement fees are split.
Use this quick checklist when you request quotes:
- Purchase price and loan amount
- Loan program (conventional, FHA, VA, USDA) and any points
- Whether the seller will pay the owner’s title policy or contribute concessions
- HOA details, including estimated transfer/estoppel fees and dues
- Expected closing date for tax and insurance prorations
- Title/escrow company contact for an itemized estimate
Timing reminders:
- Typical Prescott escrows run about 30 to 45 days, subject to underwriting and inspections.
- You will pay earnest money at contract and inspection fees as they occur.
- Your Closing Disclosure must be delivered at least three business days before you sign. Follow the title company’s instructions for wiring or certified funds.
Seller costs at a glance
For context, sellers often pay the owner’s title policy and real estate commissions, which are the largest single item. Including commissions, seller totals often fall in the 6% to 10% range, but every fee is negotiable and varies by transaction. Sellers also pay prorated taxes and any agreed credits or repairs.
Simple buyer budget worksheet
Use these prompts to build a realistic budget you can refine with your lender and title company.
- Origination and underwriting: __________
- Discount points (if any): __________
- Appraisal: __________
- Inspections (general, pest, sewer, septic/well): __________
- Lender’s title policy and escrow fee: __________
- Recording fees: __________
- Prepaid insurance and tax reserves: __________
- HOA transfer/setup and prorations: __________
- Mortgage insurance or funding fee (if applicable): __________
- Buffer for timing/prorations: __________
Ready to plan your Prescott closing?
If you want clear numbers tailored to your price point, loan, and neighborhood, we can help coordinate local quotes and review your contract so you know exactly what to bring to closing. Reach out to Karen Woodsmall for a personalized estimate and next steps.
FAQs
How much should I budget for buyer closing costs in Prescott?
- Plan for roughly 2% to 5% of the purchase price as a starting estimate, then refine with your lender and title/escrow quotes.
In Prescott, who usually pays the owner’s title policy?
- It is customary in Arizona for the seller to pay the owner’s title policy, but this is negotiable and should be confirmed in your contract.
Can a seller pay my closing costs in Prescott?
- Yes. Seller concessions are a common negotiation item, and allowable amounts depend on your loan program.
How do Yavapai County property taxes affect my closing amount?
- Taxes are prorated at closing based on the county’s billing cycles, and your lender may collect several months of reserves for future bills.
What is the biggest variable in buyer closing costs?
- Your loan selection and whether you pay discount points are usually the largest variables. Title/escrow fees and local taxes add meaningful but smaller amounts.
