Home Closing Costs In Raleigh NC

How much will it cost to buy a house in Raleigh?We actually get this question pretty often.

When you are buying a house in the Raleigh area, it could be pennies… or thousands of dollars. The answer will depend on the home sales price, the type of mortgage you are applying for, the time of YEAR you are buying a house, and what kind of fees you are asking the Seller to cover.

We’ve helped folks buy homes with as little as $500.  Nice homes.

The truth is that there are many great programs for folks who want to buy a home in NC and don’t have a ton of Cash. All of these loan programs allow the Seller to pay your closing costs, and we can help you and your Real Estate Agent structure the contract to include Seller Paid Costs.

Home Closing Costs In Raleigh NC / No-Closing Costs Options

The number of different charges involved in buying a home is mind-boggling – and it is important to know what to expect at the settlement.   Although as your lender we are required to give you a Good Faith Estimate (GFE) of your settlement costs, comparing those costs with other lenders can sometimes be difficult. For that reason we ask to see the other GFEs you receive to ensure that you are comparing “apples to apples.”

We recently reviewed a Good Faith Estimate from another Lender, here in Raleigh, and they had a charge of $875 for a Survey on a Conventional Loan for a house near North Hills that was built more than 30 years ago.  The reason we mention it is because the Bank doesn’t require a Survey.  You would want one if you are trying to put up a fence, or have a question about expanding a deck or bedroom and are concerned about being too close to the line?  But as a rule – we don’t show them on a list of items you need to budget for.

If you are looking for a No-Closing Costs Savings scenario, we can do that too.We do not add the costs to the mortgage amount, however you will not be getting the best mortgage rates.

How To Save Money On Closing Costs and Fees Buying a Home in Raleigh NC

There are four general categories of Closing Costs and Fees Associated with Buying a House in Raleigh, NC:

• Fees to get a mortgage. This includes lender fees, origination fees and points, as well as a host of other charges involved in obtaining and processing your loan, like a Tax Service Fee and Flood Check Fee (We are actually charged to verify that your property is not located in any of the Federal Flood Zone Plans).  Additionally, if we have to use a “Service” to confirm your Employment, they charge us @ $20.  Points are an upfront charge expressed as a percent of the loan amount (READ: 1 point is 1 percent of the loan) and act as a way to lower your overall interest rate. Discount points can ONLY be charged as a way to lower the mortgage interest rate. If you have a Home Owner’s Association, we will also be collecting 2 months of dues to establish your Account.  If there’s a Well or Septic System, there will also be nominal charges to verify they are in good working order.

 Specific lender fees can include:

• Loan Origination Fee – This is a charge for your lender’s work in evaluating and preparing your mortgage loan.  We do not normally quote a mortgage rate in Raleigh NC with an Origination Fee.  If you have extra cash, you can pay one, and get a SLIGHTLY lower mortgage rate.  However, on dollars of this size, it’s really not much of a savings.

• Commitment or Application Fee – This fee will show as a Commitment Fee on a Conventional Loan and as an Application Fee (collected at closing) on a USDA Home Loan or FHA Home Loan.  The charge covers the initial costs of processing your loan application and obtaining your credit report. We can not include your appraisal fee in with the Application Fee because this fee is collected at Closing, and Appraisers must be paid in advance.  this is one of the reasons we want to help you compare our Good Faith Estimate with others you might receive, because Mortgage Loan Officers in Raleigh include (and exclude) many items from this particular item.

• Appraisal Fee –The Appraisal fees currently charged in Raleigh run between $400 and $450.  We have a pretty well-rounded list of independent appraisers that we use, who are all LOCAL.

• Survey – This fee goes to a surveying firm who will verify that your lot has not been encroached upon by any structures since the last survey conducted on the property and to ensure that the home and other structures and legally where the Seller says they are.  As mentioned earlier, many of our Investors do not require a survey – this is something we will definitely discuss with you as we get further in the process.

• PMI –Mortgage Insurance is really default insurance and is found in Conventional and Government Loans (although it’s call different things).  VA Loans have the lowest PMI Rates, since there’s no monthly charge.  USDA Home Loans also have a very low PMI Rate – and FHA PMI rates are the highest.  This is not an insurance that covers you in the event of death or injury.  Most PMI rates are charged as an UpFront Fee (which is generally added to the loan amount) and a monthly fee.  You will be required to make a deposit into your Escrow Account of 2 months of the PMI Premium when you close.

• Homeowner’s Insurance – Insurance that protects property against loss caused by fire, some natural causes, vandalism, etc., depending on the terms of the policy. Also includes coverage such as personal liability and theft away from home.  We will need for you to have the Policy n place by the time of Closing.

• Fees to establish and transfer ownership of the property. It might sound silly, but we have to have Title Searches done to prove that the seller owns the property you want to buy. This is where title search fees and title insurance fees come into play. In North Carolina, the closing attorney will verify that the seller is, indeed, the owner of the property. They will obtain a title insurance policy to guard the lender against any errors that could have occurred in the searching process. The cost of the policy is based on the loan amount. The Attorney will also charge their fees for performing the closing, courier fees and other (? Miscellaneous) charges involved in the settlement process.
  • Most Attorney fees being quoted in Raleigh NC right now are between $700 and $1000. That’s a huge jump in the last couple of years.  We had the TRID changes in late 2015.  Attorney’s in NC now have a closing room for Sellers, and one for Buyers.  You no longer see the other party, and if you do, there are surveillance cameras recording the exchanges.  There are also cameras outside, and the footage must be kept for several years as evidence.  Additionally, there’s a ton security and encryption required to keep funds safe from hackers – all of those costs are being pushed on Consumers.
    
• Fees to state and local governments. These fees include transfer, recording fees at the Court House, and property taxes.  Your property taxes are based on the assessed value of the home by the County.  Taxes can often be paid as a part of your monthly mortgage payment.   In addition to this, if your property is part of a Homeowners Association there might be Association dues which are included in your monthly escrow account.  This is where it can get expensive, because you could be charged more than 6 months of taxes for your Escrow account! 

How Can I Raise The Money I Need To Buy A Home in Raleigh?

Many of the folks we work with are getting a USDA Home Loan.  That means they don’t need ANY MONEY for a Down Payment.

Here’s more GOOD NEWS:  You do NOT have to pay a fee of any kind to work with Real Estate Agents in Raleigh.  Most of them (and we work with some of the BEST) show you houses, give you market information and help you negotiate with The Seller… AND they help with any repairs the Seller is required to make.  Generally, the Repair list comes from the Home Inspection.  

We didn’t mention Home Inspections in our Costs above, because we don’t require a Home Inspection, but we strongly suggest that folks have one.  This is something that will be charged to the Buyer (normally) and the fee currently runs anywhere from $325 to $500.

The same thing is true of the Termite Fee.  The important thing to realize is that the vendors providing these services will expect to get paid whether or not your transaction closes, and they may ask that you pay when services are rendered.  If the Seller is paying the Closing costs… you need to address these upfront costs with them.

Again, ALL of these fees can be paid by us with a No Closing Cost Mortgage, but you’ll have a higher mortgage rate.

There are ways, and times, when it makes sense for us to pay some of your closing costs… however, on a purchase transaction we will not be “rolling in” closings costs to the mortgage.  This term literally refers to borrowing more than just the mortgage costs… while we can add items like the PMI on a FHA, VA or USDA loan – can not loan you more money in order to cover the attorney fees (for instance).

Having us pay SOME of your Closing Costs usually makes sense! For instance, we generally do not quote our mortgage interest rates with an origination fee.  We quote a zero point, zero origination fee mortgage rate to save you cash out-of-pocket.  This means that you have a slightly higher than market mortgage interest rate, and we absorb the cost.

First Time Home Buyers can apply for a Grant from the State of NC (NCHFA) to cover fees and down payment.  The money for Closing costs can also be a gift from a family member – or you can have your REALTOR Help you negotiate the contract so that you have Seller Paid Closing Costs to buy a home in Raleigh.

Remember that every rent check you write, builds up the Equity Bank Account for someone else.  You are paying for something you will never own.  With mortgage rates at all time lows – in most cases, Buying a home is more Affordable than Renting!

If you want more information about Home Closing Costs In Raleigh NC – please call Steve and Eleanor Thorne, 919-649-5058.  We are Mortgage Lenders in the Raleigh NC area – and we specialize in First Time Home Buyer Loans / mortgage loans across our great State!