How Much Are Closing Costs in North Carolina 2024?
Congratulations! You’re just a few steps away from closing on your new home in North Carolina. But before you can officially close, there’s one last step: pay closing costs.
Closing costs are the taxes and fees associated with the purchase and sale of a home, such as title insurance and lender fees. To help prepare you for the final steps of the homebuying process, this Redfin article will break down how much closing costs are in North Carolina, who pays for them, and what costs you can expect to pay as a buyer and as a seller.
How much are closing costs on average in North Carolina?
Before securing the keys to your new home, homebuyers will need to pay for closing costs. Generally, closing costs in North Carolina can range anywhere 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 numerous factors, such as the buyer’s loan program or negotiations made with the seller.
Let’s say you’re buying a home in Charlotte, where the median home sale price is $428,000. Based on this, you could expect closing costs to be between $8,560 and $21,400. Whereas if you’re buying a home in Durham, which has a median sale price of $435,000, closing costs could be anywhere from $8,700 to $21,750.
Who pays closing costs in North Carolina?
Generally, both buyers and sellers can expect to pay closing costs, but each party’s closing costs amount will vary depending on what they are required 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 typically deducted from the home sale proceeds.
Buyer closing costs in North Carolina
Closing costs in North Carolina for homebuyers typically range from 2%-5%. In most cases, you’ll pay earnest money, typically 1% to 3% of the home price, upon reaching mutual acceptance in your home purchase. This deposit is subtracted from your closing costs, reducing the total amount due at closing. Here are a few common closing costs that buyers typically cover:
Appraisal fee: Home appraisals, which typically range from $300 to $500, are usually paid for separately at the time of the service. However, if not, you’ll need to pay for this at closing.
Inspection fee: Although not usually required, a home inspection is highly recommended. Home inspections generally range from $300 to $500 in cost and are usually paid at the time of service. However, if not, it will need to be paid at closing.
Loan origination fee: Some lenders charge a fee for creating your loan. As you shop around for lenders, inquire about what it covers and whether it’s negotiable to avoid high fees.
Loan processing fee: Lenders may also charge a loan processing fee, covering underwriting and related services. Similar to the origination fee, check with your lender to understand its purpose and possible waivers.
Loan discount points: If you buy discount points to lower your interest rate, you’ll pay a one-time fee at closing. These points can lower your rate by 0.25% to 0.5%, but consider your long-term homeownership plans before paying for a reduced rate.
Private mortgage insurance (PMI): Required for down payments under 20%, PMI might involve an upfront fee at closing, depending on the loan type. It’s usually part of your monthly payment, but some loans offer the option to pay it as a one-time fee.
Title insurance: Title insurance is a one-time closing cost, with buyers commonly paying for both lender and owner policies.
Homeowners insurance: In North Carolina, your annual homeowner’s insurance premium may be part of your closing costs.
Homeowners Association dues: If your property is part of a homeowners association, you’ll likely pay one month’s dues upfront at closing. These fees vary and contribute to maintenance and operational costs.
Property taxes: Buyers may have to prepay property taxes as part of their closing costs in North Carolina.
Seller closing costs in North Carolina
The closing costs covered by sellers in North Carolina can vary, but here are a few common closing costs that sellers pay for:
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 their agent.
Homeowners Association fees: If the property is part of an HOA, the seller may need to pay a variety of fees. These can include HOA transfer fees, outstanding dues, and possibly a fee for obtaining HOA documents required by the buyer. The exact fees will depend on the HOA’s rules and regulations.
Property taxes: Any outstanding property taxes will be due at this time. However, if the seller has prepaid property taxes for the period that extends beyond the closing date, they may be credited back for the portion they’ve paid but won’t use.
Title insurance: Sellers typically cover the cost of the buyer’s owner’s title insurance policy. 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 is generally based on the property’s sale price.
Transfer taxes: Depending on the location and local regulations, sellers in North Carolina may be responsible for paying state transfer taxes as well as potential local transfer taxes. Transfer taxes are typically based on the property’s sale price and are collected when ownership of the property is transferred from the seller to the buyer.
Median home sale price data from the Redfin Data Center during July 2024.
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