Estimating the Costs of Buying a House

Closing costs and customs vary from state to state and every home buyer's situation is unique.  This exercise is meant to give you some idea of what to expect when buying a home in North Carolina as well as suggestions for questions to ask of your lender, attorney, and other parties involved.

You can use this page as a guide and make calculations based on your situation to arrive at an estimate of your costs to buy.

In North Carolina, closings are handled by an attorney but it is not meant to be a legal battle.  The attorney is typically chosen by the buyer and handles the paperwork for the buyer, seller, and lender.  Sellers do not normally have a separate attorney (except some foreclosures and for-sale-by-owners.) The attorney collects and disburses all funds plus oversees the signing and recording of all documents. 

A standard federal HUD-1 form is used to list and calculate the collection and payment of all costs associated with the real estate transaction.  The mortgage and all closing costs are added/subtracted from the contracted purchase price to arrive at a "bottom line" number that the buyer pays at closing to complete the deal.  That amount can be wired directly to the closing attorney from the buyers' bank or the buyers can bring a cashier's (bank) check to closing made out to the closing attorney.

The Example column below shows typical numbers for a conventional (not FHA/VA/USDA) loan for 80% @ 3.5% interest with a closing date of May 15th, annual property taxes of $2000 and annual home owners' insurance of $700 -- just to give you some idea.  Additional rules and fees may apply to VA, FHA, USDA and other types of loans.  In this example, the buyer agrees to pay $250,000 for the house and writes a check for $2000 of earnest money (to the realty company to be held in an escrow account) and $300 as a due diligence fee (paid to the seller) at the time the offer is made.

If you have a relocation package from your employer, ask them which line items they are going to pay for and if they will pay them at closing or reimburse you after closing.

We provide our Buyer Clients with a more precise estimate of closing costs as soon as they narrow in on possible options.

Search ALL Properties of all types in the greater Charlotte/Lake Norman area.



Your Estimate


Purchase Price



As agreed upon in negotiating the Offer to Purchase and Contract.

- Earnest Money



Typically .5 to 2% of purchase price is paid by the buyer and deposited in a trust account when your offer is accepted.  This is a negotiable line item in the Offer to Purchase.  Generally, the more aggressive the price offered, the higher the earnest money and due diligence fees offered.  It is applied to the price of the home at closing.

- Due Diligence Fee


The potential buyer in NC now pays the seller directly a negotiated fee with the accepted offer.  This fee "buys" the buyer the time to do all desired inspections, survey, appraisal, negotiate repairs or anything else they want to do before an agreed upon date.  This replaces all loan, appraisal, and inspection contingencies once common.  If the buyer does not close, the seller keeps this fee.  If they do close, it is applied to the purchase price. The amount is completely negotiable.

- Seller-Paid Closing Costs



If you negotiate for the seller to pay an amount of money towards the buyers' closing costs, subtract that amount here.  If the seller is paying buyers' closing costs, that generally increases the negotiated sales price by the same amount.

- Seller-Paid Repairs Costs



If, in the inspection & repairs negotiations, the seller agrees to pay the buyer to have some repair work done, subtract that amount here.  These payments must be approved by the lender.

- Mortgage Loan amount



Subtract the amount you intend to borrow.  Get quotes from lenders and decide where your comfort level is.

= Net Purchase Price Due



The balance you will owe for the house at the time of closing before adding in closing costs.













Lender Controlled Fees



Fees charged by lenders to provide and process the mortgage will vary greatly based on economic conditions, your credit score, and the type of loan.  Get "Good Faith Estimate" quotes from multiple lenders.

Loan Origination Fee



Some Lenders charge 1% of the loan amount as an origination fee but you may see this fee waived or reduced when lenders compete for your business.  Many lenders have gone to a flat fee.

Application fee



Lenders will typically quote some combination of these first four fees (not all of them) and may call them by different names.  Compare total loan costs as well as rates when choosing a lender.

Underwriting Fee




Processing Fee




Appraisal Fee



The lender passes on the cost to have the home appraised.

Credit Report Fee




Flood Certification Fee




Tax Service Fee




Buy Down "Points"



You may have the option of paying an extra up-front fee to obtain a lower interest rate than you qualify for.  Usually only a good idea if you are sure you will stay in the house for at least several years.  Not common with current low rates.





Lender Required Escrows & Pre-Paids




Per Diem Interest



At closing, you pay the interest for the remaining days of that month and your first mortgage payment will be due one month after the end of the month you are in.  (In this example: July 1.)

PMI Premium



Mortgage insurance is generally required if you are borrowing more than 80% on a conventional loan.  If you are doing any other type of loan, ask if mortgage insurance will be required and if the upfront portion of the premium can be rolled into the loan amount.

Escrow for Property Taxes



The lender will set this requirement which can vary slightly but is typically from 3 to 9 months' worth and federally regulated.  Here; 7 months. (Of which 4.5 months is from the sellers - see 4 lines below.)

Escrow for Hazzard Insurance



The lender will set this requirement which can vary slightly but is typically from 2 to 6 months' worth and federally regulated.  Here; 3 months.





1st Year's Insurance



You typically pay the first year's home owners' insurance premium at closing.





Pro-Rated Property Tax



Closing early in the year (before tax bills are out), the seller will pay the buyer for their share of taxes through the closing date.  When the bill comes due, the buyer pays it all.  If closing after the bill is available, each party will contribute their share and the bill will be paid at time of closing. In this example, the seller pays the buyer for Jan. 1 through May 15 & the buyer will pay the full $2000 bill the following January.

Pro-Rated HOA Fees



HOA fees vary by neighborhood and are usually paid in advance for 6 months or a year.  If the seller has already paid them, the buyer reimburses the seller for their share.  In this example, the seller had paid $200 for Jan.1 through June 30.





Attorney Based Charges




Attorney's Fee



The fee the attorney charges for work done by them and their staff.

Title Search & Update



Fees to research and verify that clear title to the property can be conveyed to the buyer. 

Title Insurance



Calculated based on the price of the home and the amount of the mortgage.  Title insurance is lower in NC than many other states.

Recording Fees



Charged by the county courthouse & based on the number of pages of deed and deed of trust for the mortgage to be recorded.

Couriers, Copies & Misc. Fees



There may be additional fees if a power of attorney is needed or if closing paperwork must be mailed away to buyers who can't attend closing.








Optional but strongly recommended and may be required by title insurance providers.  Large tracts of land will cost substantially more to survey. 

Home Inspection



Usually based on the size of the home and will be more if special inspections (such as radon, well or septic) are required.

Pest Inspection



Most lenders will require a pest inspection report on a standard NC form.   

Additional Inspections



In some instances, the home inspector may see something suspicious & recommend that the buyer call in a specialist -- such as a HVAC or roofing contractor or a structural engineer.

HOA transfer fee



The neighborhood's HOA management company typically charges a fee to set up billing for the new home owner.  $20 - $200.

Other fees



Every sale is unique.  Always allow for a surprise or two in your budget.





= TOTAL COSTS & Pre-Paids








Cash Needed at Closing



Add the net selling price plus the total of all closing costs to arrive at the estimated amount the buyer will need to wire to closing or bring as a cashier's check. 


The buyers' total outlay at closing is the negotiated selling price (part of which is the earnest money deposit & their due diligence fee paid at the time of the offer), plus closing costs, and pre-paid items,  minus the mortgage amount.  In the example above, the buyer pays $51,118 at closing in addtion to the $2,300 paid at the time of the offer.  They will have a mortgage of $200,000 with the first payment due July 1.  For this example, that payment would be $898.09 in principle & interest plus $58.33 for insurance and $166.67 for taxes to equal a total monthly payment of about $1123.09.

Monthly Payments:

Use our Mortgage Calculator to estimate your monthly mortgage payments.


In a typical transaction (if there is such a thing), the seller will pay:

- Commissions for both their listing firm and the firm representing the buyer.  6%  - split between the sellers' agent & the buyers' agent - is common in this market but the fee can be anything negotiated when the seller lists their property. 
- The transfer tax ($1 per $500 of the selling price; $500 in the above example.)
- Document prep fees to the attorney (around $200.)
- Recording and courier fees related to the pay-off of the Sellers' mortgage.

If negotiated in the contract, the seller may also pay:
- A portion of the buyers' closing costs.
- Some costs associated with repairs (if allowed by the lender.)
- The cost of a one-year home warranty for the buyer ($400-$1000+.)

The seller will receive a check after the sale is recorded for the purchase price less their share of costs and less the pay-off of any mortgages attached to the property.

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