Money tends to play the biggest factor in buying a house. Many renters worry about saving up for a down payment. Unless you previously served or currently serve in the military, you're going to have to come up with a down payment. But that's not the only money you'll be paying throughout the home buying process. You'll also need to come up with closing costs. If you've concentrated solely on saving money for your down payment, having to come up with this unexpected chunk of change towards the end of your purchase may be difficult. 

Saving up for a down payment is just one step in the home buying process. Don't forget to save enough for your closing costs as well.

What are Closing Costs?

Search Tucson homes for saleClosing costs are the fees and expenses due at closing. These include your lender fee (aka "origination fee"), appraisal fee, title fee, escrow fees, insurance premium, HOA fees, and taxes among other costs. By law, your lender should provide you with a loan estimate within three days of receiving a completed loan application. Your estimated closing costs should be included on this loan estimate. Likewise, three days before you close on your Tucson house, you should receive a closing disclosure form that outlines your actual closing costs. The total runs anywhere between 2-5% of your total loan. For example, if you take out a $200,000 loan for a Tucson home, your closing costs should fall between $4000 and $10,000.

Who's Responsible for Paying Closing Costs?

While sellers usually pay agent commissions, buyers tend to pay most of the closing costs. Sometimes, however, a seller may offer to pay a portion of the closing costs in order to make a deal happen. This is something that gets negotiated into the sales agreement. Talk to your Tucson real estate agent/broker if you have any questions.

What Can I Do to Reduce my Closing Costs?

Unfortunately, there's no negotiating down your property taxes when you purchase a Tucson home. However, there are some ways you might be able to reduce your closing costs. One of these ways is to shop around for your homeowners' insurance. Also, if you have a good relationship/history with your lender, you may be able to negotiate down the lender's fee. Consider shopping around for your title company and title insurance as well. Find out who the seller's title insurance is through and ask for a "reissue rate". It might save you money rather than having a whole new company issue a new policy altogether.

If you ever have any questions regarding your closing costs, feel free to contact your Tucson real estate agent. Do this as early as possible so that you still have time to shop around. It can sometimes be difficult to find the time to shop for insurance and title companies. You may feel overwhelmed by everything else involved in the buying process. In that case, your lender will make recommendations for you. How this is handled is totally up to you. Just be prepared to provide enough funds to cover both the down payment and closing costs when you buy a Tucson home.

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate