Who pays closing costs in North Carolina, Buyers or Sellers?

Both buyers and sellers pay a portion of closing costs, in North Carolina and every state. Sellers typically shoulder a larger financial burden, since they usually pay the real estate agents’ commissions.

Some counties or cities may have fees unique to that area and depending on whether the local market favors buyers or sellers, either side may try to negotiate exactly who pays what. Here are some common closing costs for sellers and buyers.

Closing costs for buyers

Origination fee: Most lenders charge an origination fee for establishing your loan. In North Carolina the loan origination fee is capped at 0.25 percent, meaning the fee on a $288,800 loan (after 20 percent down on a median-priced $361,000 sale price) would be about $722.

Mortgage points: You may want to pay money upfront to lower the interest rate on your loan. Mortgage points can save you money over the long haul but will cost you around 1 percent of your loan amount per point, initially. A point typically lowers your interest rate by 0.25 percent.

Title-related fees: A title search involves reviewing property records to confirm that there aren’t any liens or encumbrances on the home’s title; it typically costs between $300 and $600. A title insurance policy protects you and your lender against defects with the title. This is a one-time premium (not monthly) paid at closing and usually costs 0.22 to 0.25 percent of the sale price.

Insurance premiums: Mortgage lenders may require you to deposit funds into an escrow account in advance for several months’ worth of future homeowner’s insurance payments.

Property tax: Similarly, you may also be required to pre-pay a certain amount of property taxes into escrow to ensure timely payment to the local county.

Appraisal and inspection costs: Lenders require an appraisal to make sure the home you’re buying is worth the amount you’re borrowing; these usually cost a few hundred dollars. Most buyers will also want a professional home inspection to determine whether the home has any major damage or problems; that’s probably another few hundred.

Recording fees: At closing, the new deed (and new deed of trust in the case of a financed sale) will be recorded at the county courthouse with the Register of Deeds. Recording fees usually run less than $100.

Closing costs for sellers

Agent commissions: Realtor commissions are usually one of the biggest expenses for home sellers. These typically run about 5 percent to 6 percent of a home’s sale price — on a median-priced $361,000 North Carolina home, 6 percent is a steep $21,660.

Excise tax (revenue stamps): North Carolina collects an excise tax, also called “revenue stamps,” on every real estate sale. The rate is $1 for every $500 of the sale price. So a $361,000 home sale would incur $722 in revenue stamps.

Prorated property taxes and HOA fees: Sellers are responsible for property taxes up to the closing date. If the home is part of a homeowner’s association, you may be responsible for HOA fees up to the closing as well.

Wire fees: This minimal cost ($35 to $50) is to send your mortgage payoff to your lender.

Seller concessions: If you agree to it, you as the seller may pay some of the buyer’s closing costs or cover the cost of necessary repairs to the home.

Lowering your closing costs in North Carolina: Like a lot of things in real estate, many closing costs are negotiable. For example, North Carolina homebuyers hoping to lower their costs might ask the seller to pay for repairs if any problems turned up in the home inspection. Buyers should also check to see if they qualify for federal, state, or local assistance. There are many state programs aimed at first-time buyers in particular that can help cover both closing costs and the down payment, including the NC Home Advantage Mortgage program.

If you’re a seller, keep in mind that the real estate agents’ commissions might be negotiable too. Depending on the price of the home, even a small discount on this rate can save you a lot of money.