Congratulations! You are just steps away from the completion of your new North Carolina home. But there’s one final step before closing is official: paying closing costs.
Closing costs are taxes and fees associated with the sale of a home, such as title insurance and loan fees. To help you prepare for the final steps of the home buying process, this Redfin article will break down how much closing costs are in North Carolina, who pays them, and what you can expect to pay as a buyer and seller.
What are the average closing costs in North Carolina?
Homebuyers need to pay closing costs before getting the keys to their new home. Generally speaking, closing costs in North Carolina can range from 2%-5% of the home’s purchase price. But it’s important to remember that this is just a range and the total amount will depend on many factors, such as the buyer’s loan program or negotiations with the seller.
Let’s say you’re buying a home in Charlotte, where the median sales price is $428,000. Based on this, you can expect closing costs to be between $8,560 and $21,400. However, if you buy a home in Durham, where the average selling price is $435,000, closing costs could range from $8,700 to $21,750.
Who pays closing costs in North Carolina?
Generally speaking, both the buyer and the seller are required to pay closing costs, but the amount of each party’s closing costs will vary based on how much they need to pay. Keep in mind that it’s common for the buyer to pay closing costs out of pocket, while the seller’s closing costs are usually deducted from the home sale proceeds.
Buyer Closing Costs in North Carolina
Closing costs for North Carolina homebuyers typically range from 2% to 5%. In most cases, you will pay a deposit, usually 1% to 3% of the home price, once the two parties come to an agreement during the home buying process. This deposit will be deducted from your closing costs, reducing the total due at closing. Here are some common closing costs that buyers typically bear:
- Assessment fee: Home appraisals typically range from $300 to $500 and are usually paid separately at the time of service. However, if not, you will need to pay a fee at closing.
- Inspection fees: Although usually not required, a home inspection is highly recommended. The cost of a home inspection generally ranges from $300 to $500 and is usually paid at the time of service. However, if not, payment will be required at closing.
- Loan origination fee: Some lenders charge a fee to create the loan. When you’re shopping around for a lender, ask what they cover and if you can negotiate to avoid high fees.
- Loan processing fee: Lenders may also charge a fee for loan processing, including underwriting and related services. Similar to the origination fee, check with your lender to understand its purpose and possible exemptions.
- Loan discount points: If you purchase discount points to lower your interest rate, you’ll pay a one-time fee at closing. These points can lower your rates by 0.25% to 0.5%, but consider your long-term homeownership plans before paying the reduced rate.
- Private Mortgage Insurance (PMI): If the down payment is less than 20%, PMI may charge an upfront fee at closing, depending on the loan type. It is usually part of your monthly payment, but some loans offer the option of paying it as a one-time fee.
- Title Insurance: Title insurance is a one-time closing cost, and the buyer usually pays for both the lender and the owner’s policy.
- Home Insurance: In North Carolina, your annual homeownership insurance premium may be part of your closing costs.
- Homeowners Association Dues: If your property is part of a homeowners association, you may be required to pay one month’s dues upfront at closing. These fees vary and add to maintenance and operating costs.
- property tax: Buyers may have to pay property taxes upfront as part of North Carolina closing costs.
North Carolina Seller Closing Costs
The closing costs that sellers in North Carolina pay can vary, but here are some common closing costs that sellers pay:
- Real estate agent commission fees: These fees can be a significant cost for sellers. Commission fees may vary and are subject to negotiation. Sellers should discuss their options with an agent.
- Homeowners Association Fees: If the property is part of an HOA, the seller may be required to pay various fees. These fees may include HOA transfer fees, outstanding payments, and fees that may be incurred to obtain the HOA documents required by the buyer. The exact fees will depend on the HOA’s rules and regulations.
- property tax: Any outstanding property taxes will be due at this time. However, if the seller prepaid property taxes after the closing date, they may receive a refund for the portion that was paid but will not be used.
- Title Insurance: The seller usually bears the cost of the buyer’s owner’s title insurance. This policy protects the buyer from any potential title issues that may arise after the property is sold. The cost of title insurance can vary, but usually depends on the sales price of the property.
- Transfer tax: Depending on location and local regulations, North Carolina sellers may be subject to state transfer taxes as well as potential local transfer taxes. Transfer taxes are usually calculated based on the sales price of the property and are imposed when ownership of the property is transferred from the seller to the buyer.
Median home sales price data from the Redfin Data Center for July 2024.
