If you are not familiar with what closing costs and fees are typically associated with buying or selling real estate, this web page will be helpful.
Most closing cost expenses are paid when signing the final loan documents at closing. Both buyers and sellers will have closing costs. Your lender should give you a good-faith estimate so that you can compare closing costs among different lenders.
Ready to learn about closing costs? Let's start with seller closing costs.
When you transfer ownership of real estate, you do so by signing an instrument called a deed, a legal document that can only drawn up by an attorney. The owner must execute a deed and then after closing, the attorney will file it with the Register of Deeds in the county where the property is located. The typical cost associated with drawing up a deed by an attorney is $200-$225.
Real Estate Transfer Tax
When you sell real estate in North Carolina, you must pay the state excise tax. This amount is .002%. Let's say your home sold for $200,000. Multiply the rate (.002%) by the sales price ($200,000) and get $400. The closing attorney will take that much out of your proceeds at closing and pay it to the State.
If the seller has already paid the property tax for the year, then the seller will be credited at closing for the portion of the taxes that benefit the buyer. In N.C., property tax bills are usually mailed out in late August or early September. They are due upon receipt, but no penalty is applied if they are paid by Jan.5 of the following year. If the seller has not paid the property tax by the closing date, the closing attorney will take the amount of the seller's share of taxes out of the seller proceeds at closing and credit them to the buyer.
Any other fees, dues, etc., such as POA dues, will be pro-rated by the attorney at closing. For instance, if the POA dues are $400 a year and the seller has already paid the dues for the entire year, the seller will be credited for his/her unused share of dues.
This is paid when you initiate the loan application. The cost is around $40-$60.
This will cost around $400-$600 and is usually, but not always, paid in advance before the closing.
Expect to pay about $300-$500, depending on the size of the home, for a home inspection. There are other inspections you might consider, such as the heating and air system or septic tank or well. Home inspections costs are generally paid before closing.
Termite/Wood-Destroying Insect Report
Most lenders will require you to have a Wood-Destroying Insect Report, sometimes referred to as a Termite Report. This will cost around $125 and is sometimes paid before closing.
Most lenders do not require a survey. However, The Tyson Group always recommends getting one since we have had a few surprises. Title Insurance does not cover any encroachments that would have been discovered with a survey. Expect to pay around $400-$500 for a survey on a 1/2-acre lot.
Flood Certification Fee
This fee is for determining if your home is in a flood zone. It will cost from $10-$20 and is usually paid at closing.
If your house is in a flood zone, your lender will require flood insurance. To buy flood insurance you will need to get an elevation certificate done by a registered land surveyor. This certificate will cost around $250-$35. The cost is sometimes paid outside closing and sometimes paid at closing.
Attorney fees run around $700-$850 and are paid at closing.
Loan Origination Fee
This fee is charged by the lender and is set by the lender. Origination fees can run between $700-$2,000.
Here is how interim interest works. Let's say you are purchasing a house and are to close on the 25th of March. Your first regular payment will be on the first of May. Interim interest would be charged from the 25th of March until the end of April. The day of the month you close on will determine the amount of interim interest. It is collected at closing.
The title to a piece of property is evidence that the owner is in lawful possession of the property. Title insurance protects against claims from defects in the title, such as another person claiming an ownership interest, improperly recorded documents, fraud, forgery, liens, encroachments, easements and other items that are specified in the insurance policy. There are two kinds of title insurance: The first is lender's title insurance. Your lender will require you to purchase this on their behalf. The second is owner's title insurance. This protects your interest and is optional.
Your lender will want to make sure the taxes on your home are paid on time to protect its interest in the property. At closing, you will be required to pay your share of the estimated property tax in advance for the remainder of the year. You will likely have to pay an additional 12 months worth of the estimated property tax. That amount will be held in escrow and paid for you by the lender the following year when the tax is due. This is paid at closing.
If HOA fees have not been paid by the current owner, you will be credited that amount. If the current owner has already paid dues for the entire year, you will reimburse him/her for the unused share.
HOA Transfer Fee
Some HOAs will charge around $100 to give the HOA attorney information on the status of the dues and to change pertinent information.
You will likely pay one year of property insurance in advance and an additional 2-3 months worth of the estimated premium. Then each month your mortgage payment will include 1/12 of the estimated annual insurance premium. This will be held in escrow and when the premium is due, the lender will pay it for you.
In Eastern N.C. you will be required to carry a separate wind policy. Usually you will pay a one-year premium and then an additional three months of premium. This will be held in escrow and when the premium is due, the lender will pay it for you.
If the property is in a flood zone, you will have to pay one year's worth of flood insurance and will likely have to pay an additional three months worth of the estimated premium. Your mortgage payment will include 1/12 of the annual premium that will be held in escrow so that the lender can renew the insurance when it expires. Flood insurance can cost as little as $200 a year or over $1,000 a year depending on finished floor elevation and how the home was construction.
Your deed and mortgage will have to be recorded with the Register of Deeds. This cost usually runs between $55 and $100.
If you are not attending the closing, there might be some overnight fees involved to ensure the deed and/or other paperwork are signed and returned to the attorney in time for the closing. Those fees usually run around $40-60.