Closing costs in North Carolina

In the realm of real estate, buying or selling a home is often one of the most significant financial transactions individuals undertake. With median home prices in the U.S. inching towards $400,000, understanding the associated closing costs is crucial. These fees and taxes can add up to an extra 5% of the loan amount, making it essential to be informed. In this article, we’ll delve into the specifics of closing costs in North Carolina, a state known for its relatively favorable rates compared to others.

Closing Costs in North Carolina:

According to data from CoreLogic’s ClosingCorp, the average closing costs in North Carolina stand at approximately 1.1% of the sale price. For instance, in April 2023, the median selling price for a single-family home in North Carolina was $361,000, translating to closing costs of around $3,971. These costs include essential elements like title policies, appraisal, settlement, recording fees, and transfer tax.

Variations Based on Location:

The amount you’ll owe in closing costs can vary significantly depending on the local market. For example, in Mount Airy, where the median sale price is $215,000, closing costs amount to about $2,365. In bustling cities like Charlotte and Raleigh, with median prices just under $400,000, closing costs hover around $4,400. Opting for a seaside home in Kure Beach, with a median sale price of $839,500, would entail closing costs exceeding $9,000.

Who Bears the Costs?

In North Carolina, both buyers and sellers share the responsibility of covering some portion of closing costs. Sellers typically incur higher expenses, primarily due to real estate agent commissions. Negotiations regarding who pays specific fees may arise, especially in areas with unique local fees or when market dynamics favor either buyers or sellers.

Breaking Down Closing Costs:

For Buyers:

1. Origination fee: Typically capped at 0.25% of the loan amount, this fee covers the establishment of the loan.
2. Mortgage points: Paying upfront to lower the interest rate, costing around 1% of the loan amount per point.
3. Title-related fees: Including title search and insurance premiums, usually ranging from $300 to $600 and 0.22 to 0.25% of the sale price, respectively.
4. Insurance premiums: Prepaying homeowner’s insurance into an escrow account.
5. Property tax: Prepaying a portion into escrow to ensure timely payment.

For Sellers:

1. Agent commissions: Typically 5% to 6% of the sale price, representing a substantial expense.
2. Excise tax (revenue stamps): Calculated at $1 for every $500 of the sale price.
3. Prorated property taxes and HOA fees: Sellers cover taxes up to the closing date, and potential HOA fees.
4. Wire fees: Minimal cost for sending the mortgage payoff to the lender.
5. Seller concessions: Optional assistance with the buyer’s closing costs or necessary repairs.

Lowering Closing Costs:

Negotiation is key in real estate. Buyers can request sellers to cover necessary repairs post-inspection. Additionally, exploring federal, state, or local assistance programs, like the NC Home Advantage Mortgage program, can help offset closing costs and down payments. Sellers can also potentially negotiate real estate agent commissions to save on expenses.

Conclusion:

Understanding closing costs is vital in any real estate transaction. In North Carolina, where costs are relatively favorable compared to other states, being informed empowers buyers and sellers alike. By leveraging negotiation strategies and exploring available assistance programs, individuals can navigate the closing process with confidence. Whether in the Research Triangle, Charlotte, or coastal areas, a trusted local agent can be invaluable in securing the right deal at the right price.