Estimating the Costs of Buying a Home

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 me, I 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) but can, if they choose to. The attorney collects and disburses all funds plus oversees the signing and recording of all documents.  

Standard Federal Closing Documents are 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 transaction. That amount is usually wired directly to the closing attorney from the buyer's bank. Some attorneys will prefer a cashier's (bank) check made out to the closing attorney.

The Example column below shows typical numbers for a conventional (not FHA/VA/USDA) loan for 80% of the contract price @ 4.5% interest, with a closing date of May 15th, annual property taxes of $2000, and annual home owners' insurance of $780. 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 $2500 of earnest money (to the realty company, or attorney, 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. Everything is negotiable.

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.

Example: 

In this example, The buyer's 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 $51,610 at closing in addition to the $2,800 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 $1013.37 in principle & interest, plus $65 for insurance and $166.67 for taxes to equal a total monthly payment of about $1245.04. 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. 

Selling?

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 seller's agent and the buyer's agent - is common in this market, but the fees can be anything negotiated when the seller contracts to list the property.  
• The land transfer tax, commonly referred to as "revenue stamps" ($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 land transfer tax. They hide that in their contracts.
• Document prep and mortgage pay-off fees to the attorney (typically around $300.)
• Recording and courier fees related to the pay-off of the Seller's mortgage. (maybe $100)
• Any HOA transfer fee charged by the property management company. (often $50-$300.)

 If negotiated in the contract, the seller may also pay:

• A portion of the buyer's 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.

If you have a home to sell locally, I can handle that side of the transaction for you.