Who Pays Closing Costs in North Carolina?

A real estate transaction involves financial obligations beyond the purchase price. Closing costs are fees and charges paid at closing, covering services and tasks to finalize property ownership transfer. They compensate lenders, title companies, and legal professionals for their roles.

These fees ensure clear property title, proper loan document processing, and met legal requirements. Closing costs are part of the real estate process, separate from the down payment or loan principal. Understanding these costs is important for buyers and sellers.

Buyer’s Typical Closing Costs in North Carolina

Buyers in North Carolina incur closing costs, typically 2% to 5% of the home’s purchase price. A significant portion of these expenses relates to securing a mortgage loan. Loan origination fees are charged by lenders for processing the loan application and are capped at 0.25% of the loan amount in North Carolina.

Other common buyer costs include appraisal fees, ranging from $300 to $500, which assess the property’s value for the lender. Credit report fees, around $30, cover the cost of obtaining the buyer’s credit history. Survey fees may also be required to confirm property boundaries.

Buyers are responsible for the lender’s title insurance policy, which protects the lender’s investment against future title claims. Recording fees, which vary by county, are paid to the local government to officially record the new deed and mortgage. Attorney fees cover legal services for loan document preparation and overseeing the closing process. Buyers prepay several months of property taxes and homeowner’s insurance premiums into an escrow account.

Seller’s Typical Closing Costs in North Carolina

Sellers in North Carolina bear closing costs, with total expenses ranging from 2.73% to 9% of the home’s sale price, depending on whether real estate commissions are included. The largest single expense for sellers is real estate agent commissions, which average around 5.46% of the sale price and are paid from the sale proceeds. These commissions are split between the listing agent and the buyer’s agent.

Sellers pay attorney fees related to preparing the deed and facilitating the closing. Sellers may cover the owner’s title insurance policy, which protects the buyer from title defects. Prorated property taxes represent the seller’s share of taxes for the portion of the year they owned the property.

Any outstanding mortgage balance on the property must be paid off at closing, including accrued interest and potential prepayment penalties. The state excise tax is paid by the seller, calculated at $1 for every $500 of the sale price. These fees and taxes are deducted from the seller’s proceeds at closing.

Negotiating Closing Costs

While certain closing costs are fixed, many are subject to negotiation between the buyer and seller in North Carolina. The specific terms of who pays what can be formally outlined in the purchase agreement. Market conditions influence the leverage each party has in these negotiations. For example, in a buyer’s market, sellers might be more inclined to contribute to a buyer’s closing costs to facilitate a sale.

Conversely, in a seller’s market, buyers may be more willing to cover a larger portion of the costs to secure a desired property. Seller concessions, where the seller agrees to pay a certain amount towards the buyer’s closing costs, are a negotiation point. These contributions help buyers manage their upfront expenses. Adjustments to the purchase price can also be a form of negotiation, indirectly influencing the net costs for both parties.

The Closing Disclosure and Final Costs

The Closing Disclosure (CD) is a five-page document that summarizes all financial aspects of a real estate transaction. Mandated by the Consumer Financial Protection Bureau (CFPB), its purpose is to ensure transparency by detailing all costs and credits for both the buyer and seller.

Both the buyer and seller receive their respective Closing Disclosures at least three business days before the scheduled closing date. This waiting period allows time to review the final loan terms, projected monthly payments, and the breakdown of all associated fees. Buyers should compare the Closing Disclosure with their initial Loan Estimate to identify any discrepancies. Reviewing each line item on the Closing Disclosure is important to understand who is responsible for each charge and to ensure accuracy before signing the final documents.