Buyer Closing Costs in NC: What Adds Up

Caul Group Residential, brokered by eXp Realty

Buyer closing costs in North Carolina add up from five main buckets: lender fees, attorney and title costs, government recording fees, prepaid interest and insurance, and the starting deposit for your escrow account. Your lender's Loan Estimate lists each one by section, and the prepaids and escrow deposit are often what make a quote look bigger than you expected.

Here is what is in each bucket, where it shows on the Loan Estimate, who pays what under the standard NC contract, and how to check whether your quote makes sense. This is general information, not legal or tax advice. Your lender and closing attorney can explain the numbers on your own loan.

Closing costs vs cash to close

These are two different numbers on your Loan Estimate.

• Closing costs are the upfront costs to get your loan and transfer the home to you.
• Estimated cash to close is what you bring to closing. The CFPB explains that it is your down payment plus closing costs, minus deposits you already paid (such as earnest money and the due diligence fee, which are credited to you), minus any seller credits, plus or minus other adjustments.

So a quote that looks large may be your cash to close, not your closing costs. Ask which one you are looking at.

The five buckets of buyer closing costs

1. Lender fees

These are charges for making your loan. On the Loan Estimate they sit under Loan Costs:

• Section A, Origination Charges. Upfront lender fees, such as points, application, underwriting or processing fees. The CFPB says lenders itemize these differently, so compare the section total.
• Section B, Services You Cannot Shop For. Services the lender requires and chooses, such as the appraisal, credit report and flood determination. For FHA, VA or USDA loans, the upfront mortgage insurance premium or funding fee usually shows here.
• Section C, Services You Can Shop For. Services the lender requires but lets you choose from a provider list, such as a survey or pest inspection. On the CFPB's sample form, title charges and the settlement agent fee are listed here too.

2. Attorney and title costs

In North Carolina, the standard Offer to Purchase and Contract (Form 2-T) notes that the NC State Bar treats most closing work as the practice of law, which is why NC buyers usually hire a closing attorney. Under Form 2-T, the buyer pays for:

• The title search and title insurance.
• The closing attorney's fees for preparing the Closing Disclosure and other settlement statements.
• Preparing and recording the deed of trust for your loan.

On the CFPB's sample Loan Estimate, the lender's title policy and settlement agent fee are in Section C, and the owner's title policy is in Section H, marked "optional." Ask your closing attorney what each title line covers before you decide.

3. Government recording fees

These are fixed by state law and are the same in every NC county, including Wake and Durham. NCGS 161-10 sets them, and the Wake County Register of Deeds lists them on its fee page:

• Deed: $26 for the first 15 pages, plus $4 for each extra page. Form 2-T makes recording the deed a buyer cost.
• Deed of trust (your mortgage): $64 for the first 35 pages, plus $4 for each extra page.

They show on the Loan Estimate in Section E, Taxes and Other Government Fees.

What about the excise tax? NC charges an excise tax (often called revenue stamps) of $1 for every $500 of the price. NCGS 105-228.30 says the seller pays it, and Form 2-T puts it on the seller too. On a $400,000 sale, that is $800, paid by the seller. If you see transfer taxes on your Loan Estimate, ask your lender whether they belong to you.

4. Prepaid interest and insurance (Section F)

Prepaids are bills for your new home that you pay ahead at closing. They are not fees for the loan.

• Homeowners insurance. The CFPB says you usually pay the first 6 to 12 months of premium at or before closing. You choose the insurer, so the amount depends on the policy you pick.
• Prepaid interest. Interest for the days between your closing date and the start of your first payment period, shown as a per-day amount times a number of days. Closing later or earlier in a month changes how many days you prepay.
• Mortgage insurance or property taxes, if your lender collects any of these up front.

5. Initial escrow deposit (Section G)

Many lenders require an escrow account to pay your property taxes and homeowners insurance. At closing, federal rules let the lender collect enough to cover those bills through your first payment date, plus a cushion of up to one-sixth of the year's escrow payments (about two months).

NC property taxes are due September 1 each year and can be paid without interest before January 6. So the month you close can change how much goes into escrow at the start.

Costs that are split at closing (prorations)

Some items are shared between you and the seller by date, not charged as fees. Under Form 2-T, property taxes and HOA dues are prorated on a calendar year basis. The NC Real Estate Commission explains that property taxes are assessed as of January 1, the seller covers the part of the year through closing, and you cover the rest.

If the seller already paid this year's tax bill, you may repay the seller for the days after closing. If not, the seller's share may be credited to you. These adjustments show on your settlement papers, not as lender fees.

Who pays what under the standard NC contract

Form 2-T sets these defaults. The buyer and seller can agree to something different in writing.

Costs you pay before closing

Some buyer costs never show up as closing costs because you pay them during the due diligence period:

• Home inspection and other checks such as a pest or radon inspection.
• A survey, if you order one before closing.
• The due diligence fee and earnest money. These are not extra costs. They are credited toward your purchase at closing.

Keep receipts so you can match what you already paid against your final numbers.

Read your Loan Estimate section by section

The lender must send your Loan Estimate within three business days of your application, and every lender uses the same form. Page 2 lists Loan Costs (Sections A to D) and Other Costs (Sections E to I). Section J is your total closing costs.

To check whether a quote is realistic:

1. Compare the same sections across lenders. Origination charges (A) and services you cannot shop for (B) are the cleanest comparison.
2. Set the prepaids and escrow (F and G) aside. They depend on your insurance, tax bill and closing date, not the lender. A lender with a lower total may have just estimated them lower.
3. Check the title and attorney lines (C and H). Ask your closing attorney what each one is.
4. Look for lender credits. The CFPB notes a lender credit can mean a higher interest rate.
5. Ask what changed if a new Loan Estimate looks different from the last one.

Ways buyers lower cash to close

• Seller concessions. Form 2-T has a line where the seller agrees to pay part of your costs. Your loan program may limit how much.
• Lender credits. These lower upfront costs, often in exchange for a higher rate.
• Shopping Section C services from the lender's list or on your own, after checking with your lender.
• Asking about your closing date, since it changes prepaid interest and escrow.

The CFPB points out that these costs are still paid somewhere: through a higher price, a higher rate or a bigger loan. Compare the total cost, not only the cash you bring.

When it is time to send money, call your closing attorney's office at a number you know is real to confirm wiring instructions before you wire anything.

Frequently asked questions

How much are closing costs for buyers in NC?

It depends on your loan, price, insurance, property tax bill and closing date. Your Loan Estimate shows your own total in Section J. Compare lender fees (Sections A and B) across lenders, and treat prepaids and escrow (Sections F and G) as bills for the home paid ahead.

Does the buyer or seller pay the excise tax in NC?

The seller. NCGS 105-228.30 says the seller pays the excise tax of $1 per $500 of the price, and the standard NC contract puts it on the seller too.

Why is my closing cost quote so high?

Many quotes include prepaid homeowners insurance, prepaid interest and the starting deposit for your escrow account. Those are bills for the home paid ahead, not loan fees. Some quotes also show cash to close, which adds your down payment.

What are prepaids on a Loan Estimate?

Prepaids, in Section F, are costs paid ahead at closing, such as 6 to 12 months of homeowners insurance and interest from your closing date to the start of your first payment period.

Do I need a closing attorney in NC?

The standard NC contract notes that the NC State Bar treats most closing work as the practice of law, and the NC Bar Association and NC REALTORS recommend every buyer hire a licensed NC attorney to close. The buyer pays the attorney's fees for preparing the closing statements.

Can the seller pay my closing costs in NC?

Yes, if the seller agrees. The standard NC contract has a seller concessions line for an amount or percent toward your costs. Your loan program may cap how much the seller can pay.

Questions about your closing costs?

Our founder, Tina Caul, has been in real estate since 2001. If you are getting ready to buy, we can walk you through your Loan Estimate and what you will need at closing. For questions about your own costs, talk with your lender and closing attorney.

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