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  • Writer's pictureNathan Zarcaro

Here's What You'll Pay in Closing Costs in NC

Updated: Jun 7, 2023


You're looking to buy a new home in North Carolina, and you fall in love with a home you think you can afford, only to find out that you forgot about the "extra expenses" in the home buying process, like your down payment and closing costs.


If this sounds like you, or you're just wondering how much to budget for these extra expenses, you're far from alone.


Keep reading this article to learn what you can expect to pay in closing costs when you purchase a home in North Carolina.



Downtown Charlotte, North Carolina


How much are closing costs in North Carolina?


Closing costs in North Carolina are near the middle of the pack across the United States in terms of affordability (17th most expensive). A 2021 study by Closing Corp found that the average North Carolina home carries buyer closing costs of about 1.3% of the home's purchase price. It is important to note that their analysis excluded three popular expenses:


  1. Loan origination fees, which can cost around 1% of the home's purchase price

  2. Private mortgage insurance, which you will pay monthly on conventional mortgages with down payments under 20%

  3. Your down payment, which is not technically a closing cost, but an expense paid for at close


With this in mind, it is more likely that your closing costs will run you somewhere between 2-3% of your home's purchase price. With an average NC home price of $320,291, you can generally expect to pay $6,406-$9,609 in closing costs, including your loan origination fees.


Of course, home prices in North Carolina vary greatly. Towns on the outer banks and communities around Charlotte, Raleigh, and Durham are likely to be more expensive, while cheaper real estate exists in less populated western areas of the state.



Average Home Price

$320,291

Average Closing Costs

2%-3% of home purchase price

Median Property Tax

0.77%, below nat'l average of 1.07%


What are closing costs anyway?


Before we proceed, it is really important to understand exactly which fees we're talking about when we mention "closing costs." Your closing costs are your list of expenses that you incur as you work through the home buying process. Generally, you'll being a bank check to your closing to officially complete the real estate transaction, at which point your title attorney/company will become responsible for paying all involved parties what they are owed.


When you buy a home, you'll likely incur expenses that fall into one of these four major categories:


  1. Lender fees (paid to the bank/mortgage company)

  2. Title fees (attorney/title company)

  3. Property-based fees

  4. Your down payment



1. Loan origination and lender fees


The largest set of your expenses (other than your down payment) will likely be to compensate your bank for issuing your new mortgage. You'll most likely be charged for a litany of (mostly) small fees, including:


  • Mortgage application

  • Underwriting

  • Document preparation

  • Courier

  • Credit reporting


This list of expenses will not be the same with every lender, nor will it cost the same amount of money. And there may well be others too, but collectively, these fees may be known as loan origination fees.


You'll most likely also be asked if you want to "buy points" on your mortgage. This is essentially your lender asking if you'd rather pay more at closing in exchange for a lower interest rate on your mortgage. But if you're trying to keep your closing costs as low as possible, it may not make sense to "buy" a lower interest rate.


All in, these expenses are likely to cost you about 1% of the loan amount.



2. Title fees in North Carolina


You'll also need to pay your real estate attorney or title company for the services you provide. Normally, the priciest of these services is your title search, which is work performed by an attorney to ensure that the title of your new home can indeed be transferred to you. It assures that:


  • There are no outstanding claims or liens on your new property

  • There are no other owners unaware of the home sale

  • Other legal restrictions or issues that could arise


Unfortunately, it is possible to miss things during title searches, but your bank will mandate that you purchase title insurance, a one-time fee that protects you in the event that a title issue arises in the future.


Your title search should cost a few hundred dollars. Depending on the company or attorney you use, you may also need to pay for a few other extraneous fees, including:


  • Legal document preparation

  • Courier fees

  • Notary fees


Some companies may bundle these fees into one quote or bill, so make sure to ask what is included for the price you are paying.



3. Property based fees


Also included in your closing costs in North Carolina are a variety of expenses needed to get your property ready for the transfer of ownership. Before you can close on your home, you'll need to fulfill lender requirements such as:


  1. Completing a home appraisal

  2. Prepaying a year of homeowner's insurance

  3. Prepaying some property tax

  4. Flood certifications

  5. Survey fees

  6. Insurance riders


Your NC prepaid property taxes will likely begin to establish an escrow account, where the bank collects money from you to pay your property tax bill and homeowner's insurance premium. Each month moving forward, baked into your mortgage payment, you'll pay extra to cover these expenses. That way, you won't have to come up with huge sums of money beyond your monthly payments.


As part of the home buying process, you may also opt to have a home inspection, which makes all the sense in the world. You want to assure that your new home doesn't have any defects or major issues directly out of your site. Good inspectors will also be able to provide you an estimate of useful life remaining on many of the home's systems. A home inspection will likely cost about $300-$500 for an average home, though you can oftentimes add on extra services such as water and radon testing.



4. Down payment


Your down payment will make up the largest percentage of the check you bring to your closing, though it is not a conventional closing cost, per se. Your mortgage loan options will likely include Conventional, Conventional 97, FHA, USDA, and VA loans, depending on your eligibility.


All of these programs are different and require down payments ranging from 0% to 10%, or more. Do keep in mind that Conventional mortgages do require you to pay private mortgage insurance (PMI) until you reach 20% home equity.



What decides how high my closing costs are?


Your North Carolina projected closing costs are just an estimate will be determined by a number of factors, including:


  1. The extent of fees your lender charges

  2. The fees assessed by your title company

  3. When in the month you close

  4. The property taxes in your county/town



Property taxes in North Carolina


Property taxes in NC are lower than the national average, at about 0.77% per year, as compared to the national average of 1.07%, according to SmartAsset. And since most closings will require you to prepay at least two months of property taxes (and potentially as many as six months), they can have a large impact on how high your closing expenses will be.



Lowest property tax counties in North Carolina


North Carolina has many counties that have real estate tax rates below the state average of 0.77%. The five lowest property taxes counties are as follows:


  1. Watauga County - 0.43%

  2. Jackson County - 0.44%

  3. Avery County - 0.45%

  4. Macon County - 0.46%

  5. Clay County - 0.47%



Highest property tax counties in North Carolina


Meanwhile, the following NC counties have the highest taxes in the state:


  1. Edgecombe County - 1.25%

  2. Northampton County - 1.19%

  3. Orange County - 1.19%

  4. Durham County - 1.18%

  5. Scotland County - 1.18%


Homes across the state are not reappraised often, so in theory, these percentages could be off somewhat, especially given that home prices increased substantially in NC between 2020-2022. For a full list of NC property tax rates by county, click here.



How to lower your closing costs


Buying a house comes with a lot of expenses, many of them unavoidable. However, you still have a number of tools at your disposal to lower your closing costs in NC. Among the strategies that you can utilize are:


  • Setting your closing for late in the month - This will help you to avoid prepaying a lot of mortgage interest for the remainder of the month in which you take ownership of the house.


  • Financing your closing costs - Some lenders will allow you to roll some or all of your closing expenses into your mortgage loan. Do keep in mind that this will lead to higher mortgage payments for the entirety of your loan.


  • Negotiate some lender fees - This strategy depends on the bank you use, as well as the real estate market strength at the time you are buying. If new home sales are low, you have leverage to ask the bank to cut some fees.



Download our NC closing cost calculator


We've created a closing cost calculator to help prospective buyers in North Carolina understand how much they may need to prepare to pay. We take into account all the common expenses, such as your loan origination, underwriting, and title fees, as well as the more obscure fees you may face, such as survey and flood certification fees.


All you have to do is search for the services in your area, and then estimate your expenses based off the research you conduct.


North Carolina closing cost calculator



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About Nathan Zarcaro

Nathan Zarcaro is the founder of The Student Debt Destroyer and is passionate about personal finance related causes.  A 2018 graduate of Providence College's Liberal Arts Honors Program, Nathan studied Finance, and has worked for industry leaders in both finance and healthcare.  In his free time, Nathan enjoys playing golf and traveling with his wife Brigid.

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