What are closing costs and who pays them?

If you are new to buying a home, you have probably heard the term "closing costs" and wondered exactly what they are. Closing costs include a variety of expenses that come with buying a home such as fees for a title search, title insurance, homeowners insurance, lender costs, taxes, and transfer fees. Closing costs can range anywhere from 1-3% of the price of the house. In Arizona, the average is 1.2-1.7%, which comes out to $3000-$4250 for a $250,000 house. If you don't have that kind of cash, it is not uncommon for the buyer to ask the seller to pay the closing costs, and then offer a few thousand dollars above asking price so that the seller can get that money back when the loan closes. Right now, in February 2020, the market is HOT, however, and many homes in the affordable price ranges are getting 5-10 offers each on them. Buyers usually choose the offer that nets them the most money, so if you want to be a top competitor, it is best to see if you can save a few thousand dollars and keep that in the bank so that you can put in the most competitive offer when you find the house you really want.