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. When you work with us, we will provide you with a much more precise estimate of closing costs as soon as you narrow in on possible options.
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, This is just an example. 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.
In this example, The buyers' total outlay of cash 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 $51,703 at closing in addition 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. If borrowing 80% or less, it is usually optional to escrow for taxes and insurance.
Monthly Payments: Use the mortgage calculator on each listing page to estimate your principal & interest payment.
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 contracts to list the property.
- The transfer tax ($1 per $500 of the selling price; $500 in the above example.) With new construction production homes, the builder usually makes the buyer pay the transfer tax. They hide that in their contracts.
- Document prep and mortgage pay-off fees to the attorney (typically around $200.)
- Recording and courier fees related to the pay-off of the Sellers' mortgage. (maybe $100)
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.
Let us know if you have a home to sell locally. We can recommend the best listings agents to handle that side of the transaction for you.
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