Closing Costs 101: Real Numbers for NC & SC Buyers

One of the most well-known aspects of the homebuying process is closing. Once you’ve searched for and decided on the best home for you, the closing process is what begins the final steps to getting into the home of your dreams. But what’s included in the closing process? How does it work, and what do some of these costs mean? More importantly, what is the closing experience like across the Carolinas? We’ve done some digging and tapped an expert to help demystify all that’s included in your closing experience. 

What are Closing Costs?

Closing costs are the final fees and other charges associated with buying a home. Examples of some of these costs include mortgage fees, inspection and appraisal costs, application fees, insurances and more. Kelley King Williams, a licensed realtor in both North and South Carolina with the Stacey Sauls Group at Keller Williams Ballantyne, detailed some of the finer points of closing costs for us. “The total amount often depends on how a buyer is financing a transaction, as different loan types (like FHA, VA, or Conventional) carry different requirements and fees,” she explained. In terms of the real numbers behind what these costs can look like, King demonstrated through percentages. “Typically, these closing costs range from 2% to 5% of the home’s purchase price,” she said.

As a general example, if you purchase a home at around $350,000, closing costs on that home can be anywhere from $7,000 to $17,500.

What Do Closing Costs Cover? 

The breadth of what closing costs can cover is wide. While total costs may depend on the price of the house and the type of loan you secure, there are a few specific charges that are included in your closing costs sum. King states that it's important to note that closing costs aren’t a singular fee, but a series of additional costs near the end of the homebuying process that go to different involved parties within the purchase. She goes on to list examples of what closing costs may cover, as follows:

• Lender Fees: Application, origination, and credit report fees. ($1,500+)
• Third-Party Services: The appraisal (to verify the home's value) and home inspections. ($200+)
• Title Charges: A title search to ensure there are no liens on the property, and title insurance to protect you and the lender. ($2,500+)
• Prepaids: Includes your first year of homeowners' insurance and a "cushion" for your escrow account to pay future property taxes. ($4,000+)
• Government Fees: Recording fees to officially register the deed with the county. ($2,000+)

Source for price estimates: The Urban Institute

Closing costs in North Carolina 

Closing costs can vary greatly by state, due to an array of factors. Some of those include:

• Required legal services 
• State transfer taxes
• Lenders (some don’t lend in all states) 
• Geography

North and South Carolina are also affected by key differences in closing costs. King expands further, noting, “While the general percentages are similar, the specific fees change when you cross the state line.”

Here are some examples of specifics regarding closing costs in North Carolina, per King:

In terms of transfer taxes, “Sellers pay an 'Excise Tax' at a rate of $1 for every $500 of the sale price,” King said. There's also a noteworthy difference in the timing of property tax charges. “North Carolina taxes are paid in arrears (due in September),” King explained. 

These are just a few examples of factors that impact closing costs from state to state. Not every state may require an excise tax, or another state may pay its property taxes in a different way or at a different time. 

Closing costs in South Carolina

Closing costs in South Carolina also have definitive differences, from the broader U.S and from its neighbor, North Carolina. “In South Carolina, an attorney must oversee the closing by law. In North Carolina, while attorneys also handle the process, the roles and specific title insurance rates vary based on state-regulated filings,” said King.

In this case, legal service fees make a sizeable difference in what closing costs may look like in this state. While North Carolina sellers are required to pay an excise tax, the state of South Carolina charges a ‘Deed Recording Fee’. According to King, this fee is “$1.85 per $500 of value (composed of state and county portions).”

Property tax timing also factors in. “South Carolina has specific assessment and proration schedules that can lead to different 'cash-to-close' requirements depending on the month you move,” King explained. 

Who Pays Closing Costs?

When it comes to who foots the bill at closing, the answer is both buyer and seller, but for different pieces of the closing cost fee bundle. King notes that while buyers may cover prepaids, inspection, and loan-related fees, sellers may be in charge of handling commissions, taxes, and deed-related fees. 

Realtor Tips for Closing

While closing costs can pile on to already mounting homebuyer expenses, there are ways to lighten the load with strategic planning. King notes three specific tips when it comes to potentially lowering closing costs:

1. “Shop around for services: You aren't required to use the first inspector or insurance agent you find. Comparing quotes can save hundreds.
2. Negotiate seller concessions: In many markets, your realtor can negotiate for the seller to pay a portion of the buyer's closing costs. While this doesn't necessarily change the amount of closing costs you need, it can impact the amount of money you are bringing to the table.
3. Lender Credits: Some lenders offer to cover closing costs in exchange for a slightly higher interest rate — a great way to keep cash in your pocket today.”

Bottom Line

Closing costs are a simple fact of first-time homebuyer costs, but they don’t have to be overwhelming. There are ways to plan or negotiate alongside your realtor to get closing terms that work best for you. At True Homes, our priority is you, and we will work diligently alongside you, your realtor, and every other entity involved in the homebuying process to get you into the home of your dreams quickly and comfortably.

If you’re ready to learn more about a partnership with True Homes, we can’t wait to meet you! Contact a sales rep today to get started and eventually close on a place that’s uniquely yours, and on your terms.