Buying a home can be an exciting stage of life. Perhaps you are looking forward to having your own space where you do not share any walls with neighbors. Maybe you cannot wait for your monthly payments to go toward building equity rather than disappearing into the landlord’s pocket, never to be seen again by you.
Whatever your reason for buying a home is, choosing the right place to move can be challenging. If you are not limited by professional aspirations, then two states that should be in contention are Arizona and North Carolina.
Both of these states have plenty of reasons to move to them, from an affordable cost of living to beautiful weather during most of the year. One thing that may factor into your decision is the price of a home in each state, including the closing costs.
What is Included in Closing Costs?
Closing costs are no fun to discover once you have begun the process of buying a home. Fortunately, you are reading this article, so you will be prepared to include this element in your housing budget.
Closing costs refer to any of the extra fees that are required to complete a real estate transaction outside of the price of the home. That means when you agree to buy a house for $250,000, the actual total costs that you will need to pay will be higher than that because of closing costs.
Here is a list of some expenses that might be included in the closing costs of a real estate transaction:
- Loan origination fee
- Attorney fee
- Realtor fee
- Title search fee
- Transfer taxes
- Property appraisal
- Prepaid property insurance/taxes/interest
- Homeowner’s Association fee
- Underwriting fee
- Escrow fee
- Application fee
As you can see, there are a lot of expenses that will be included in the closing costs, either for the buyer, the seller, or both. There may be more depending on how the sale process works in your state and town. Different municipalities within each state will have different processes that can have varying costs, so there is no guarantee on what the fees are and how much they will be.
Costs in Arizona Vs North Carolina
Now we get to the difference between closing costs in these two states. First, closing costs are affected by the price of the home itself. In Arizona, the median price for a house is currently around $435,400. Meanwhile, in North Carolina, that number is $363,300. That means prices tend to be a little cheaper in North Carolina, though there are plenty of much cheaper and much more expensive options in both states. In general, the higher the home price, the higher the closing costs, so you can expect to pay more in Arizona than in North Carolina.
However, the rate for closing costs is not the same across every state. For example, the average closing costs in AZ according to research are around 1.2%. They can fall within the range of 2-5% for most buyers. However, in NC, the average closing costs are 1.1%. That may not sound like a big difference, but when you are talking about homes that cost hundreds of thousands of dollars, the difference could be in the hundreds or even thousands for homes with the same price. It should be noted that you will likely get more bang for your buck in North Carolina since homes tend to be cheaper.
Choosing Between Arizona or North Carolina
Now that you understand the state of the housing market in each state and the associated closing costs, you may be wondering how to decide which state to move to. North Carolina offers many beautiful cities on the rise like Raleigh, as well as coastline on the Atlantic Ocean. Meanwhile, Arizona features some of the most amazing landscapes on the planet, including the Grand Canyon, and sees warm, sunny days for most of the year. Either state could become a paradise for the right person or family, and each offers unique work opportunities that will allow you to lay down roots in the community. It all depends on the kind of lifestyle you want; the American Southwest or the Southeast along the coast.
Remember to Factor Closing Costs Into Your Budget
As you shop for homes in whichever market you choose, remember to always factor closing costs into the final price of the home. Although the averages are low, that doesn’t mean it is impossible to pay up to 5% of the price of the home in closing costs. Keep these numbers in mind when planning your property budget and considering how these fees will affect the monthly payments on your mortgage, whether you are moving to Arizona or North Carolina.