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The Costs of Buying a Home in North Carolina

Congratulations! With the help of a Realtor, you have negotiated the purchase price and terms for your future home . . . you are officially under contract!

You may be wondering, “What other costs should I expect to pay when buying a house?” Generally, closing costs can be broken down as follows:

Lender Fees—Unless you are a cash buyer, you can expect to pay various fees depending on the type of loan and lender you choose. These fees include:

0-2% of the loan amount goes to the lender for preparing the loan
$75 for a tax service fee
$15 for flood certification
$20 to $75 (and possibly more) for a credit report
Interim Interest, which covers the interest on the home loan from the day you sign for the loan until the end of the current month
$500 appraisal fee (but this will depend on the size of the home)

Third-Party Fees for Closing Your Loan—A third party is anyone at the table besides you and the lender. Third party fees include:

Title Insurance ($2 per thousand for first $100,000/$1.50 per thousand for $100,000–$500,000)
Generally $1,000 for a closing attorney (not affected by price of home)
$100 to the county government to record the legal documents
Prorated HOA fees (if your neighborhood has an HOA; most do)
Prorated property taxes
Escrows/prepaids: most lenders will typically require 3 months of taxes, homeowner’s insurance, and HOA dues to be held in an Escrow Account

Other Costs to Close for the Buyer—You may have to assume other costs that are more likely to be paid outside of closing costs (not paid on closing day/not on Closing Disclosures). Typically, these include home inspections ($450+), radon testing ($90), termite inspection ($75), and less often done is a survey of land ($500, but increases with size of the property).

So, what is the bottom line? There are many factors that determine buyers’ total closing costs and other costs paid outside of closing when purchasing your home. The numbers above are estimates based on a sampling of closings in the Triangle area of North Carolina. Your closing costs may vary based on your lender, the size of your loan, and whether or not you’re paying in cash. To get the most accurate estimate, talk to your Real Estate Agent and Mortgage Lender.

Definitions and Explanations

Lender Related Costs—Mortgage costs vary from lender to lender and can change frequently. You should contact each lender and obtain a list of fees prior to contracting for a mortgage.

Attorney Fees—Unless you have experience with the process of writing and filing deeds, you will need to hire a lawyer for deed preparation and recording. Choosing the right lawyer to assist in closing can significantly reduce potential problems associated with purchasing a home.

Survey—Before purchasing real estate, it is always a good idea for a buyer to determine whether buildings or other improvements are actually located on the property and verify that a neighbor’s buildings or improvements do not encroach on the property to be purchased.

Title Search—Lenders require a title search to determine if any title defects, liens, mortgages, or easements are involved with the real estate in question.

Title Insurance—Lending institutions require title insurance to cover possible costs related to title defects or even certain unrecorded liens that may be uncovered after closing. Title insurance varies depending on the amount of the loan. Lender title insurance does not insure owners; therefore, an owner may want to buy an additional buyer’s policy.

Recording Fee—This is a fee paid to have the deed recorded at the county courthouse.

Home Inspection—This is an optional inspection (but always strongly recommended) whereby a trained licensed contractor inspects a property before closing. A home inspector typically inspects the foundation, electrical, plumbing, and overall construction. In addition to a home inspection, a buyer may wish to hire specialized inspectors to evaluate the roof, heating system, septic system, and any other systems or structures involved in the real estate transaction. An inspection for wood-destroying insects is generally requested by lending institutions. It is recommended that all buyers have a yearly inspection for wood-destroying insects. If a home has a warranty against wood-destroying insects, we advise the warranty be continued if possible.

Escrow—This is the legal term that acknowledges your lender is “holding” money from you in order to pay another party.

The Costs of Buying a Home in North Carolina

Definitions and Explanations

Need a Realtor to navigate the complex home buying process? Contact me, and I will be glad to help!

Nicole Mudd Realty

Nicole Mudd

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