So you’ve made an offer on your dream home, secured your mortgage from a lender, and you’ve already started packing. But there’s an unexpected bump in the road, suddenly you’re being hit with thousands of dollars in closing costs and you’re scrambling to come up with the balance. What happened and why do you need to pay so much upfront? Let’s dive into closing costs:
What are Mortgage Closing Costs?
Closing costs are the fees you’ll pay for the services and expenses required to close on your home. These may include your realtor’s commission fees, attorney fees, closing fees, courier fees if you’re signing documents in person, HOA transfer fees, homeowner’s insurance, inspections, appraisal fees, property taxes, recording fees, transfer taxes, and sometimes even more. Because these are not associated with your mortgage, you’ll likely end up paying for these fees out of pocket. This may seem like a lot, but don’t despair! On average, closing costs are about 2-5% of the price of your new home. Read more about closing costs here.
Who Pays Closing Costs?
Most of the closing costs fall to the buyer. Sellers also have to pay some closing costs such as their realtor’s commission fee, revenue tax, attorney fees, and pro-rated HOA and tax. However, buyers incur more fees than sellers to cover inspections, loan origination fees, escrow amounts, insurance policies, and more. Sellers are able to deduct their closing costs from the proceeds of the sale, which usually ends up costing about 1-2% of the sale price, depending on whether or not sellers use a realtor, in which case deducts about 3-5% of the sale price.
What are Closing Costs in NC?
As stated earlier, closing fees can range from 2-5% of the total purchase price of the home. In North Carolina, the average cost of a home is $369,500, making closing costs range from $7,390-$18,475. If you’re wondering why homes in NC have been so expensive in the past few years, read our post about it here.