Hedrick Street Real Estate
Hedrick Street Homes
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Hedrick Street Real Estate
Hedrick Street Real Estate

Closing Costs

Closing costs you should expect

There are certain normal expenses accompanying closing the sale of a house. These fees are usually divided between the buyer and seller, as dictated in the sales contract. Many are universal, but there are nuances to each, so you'll want a real estate expert in North Carolina to help guide you through the process.

Loan-related closing costs

  • Loan Origination Fee
    This covers the administrative expenses in setting-up and processing the loan. The loan origination fee may be a percentage of the mortgage amount.
  • Points (optional)
    An option for the home buyer is to pay points to lower the interest rate at which the loan will be repaid. Each point equals 1 percent of the mortgage amount. For example: on a $150,000 loan, 1 point would equal $1,500.
  • Appraisal Fee
    The fee for having the house appraised may be incorporated into the closing costs or payment may be required by the lender at the time the loan application is submitted.
  • Credit Report
    The lender uses a credit report to determine the creditworthiness of the loan applicant. This fee is often paid when the loan application is submitted.
  • Interest Payment
    Typically the buyer is required to pay interest on the mortgage loan to cover the time between the closing date and when the first mortgage payment period begins. For example: If closing is on May 15. Your first monthly payment begins to accrue interest on June 1 with your first mortgage payment due July 1. At closing an interest payment covering the accrual period between May 15 and May 31 may be required.
  • Escrow Account
    At closing a payment may be required to fund the escrow account if the lender is paying home insurance, property taxes and/or other expenses out of the escrow account.

At closing, the following taxes are usually paid 

  • Property Taxes
    This is the one closing cost that is often prorated between the buyer and seller. If the seller has already paid the annual property taxes, the buyer typically reimburses the seller for the period in which the buyer will be occupying the property. Likewise, if the taxes have not yet been paid, the seller typically reimburses the buyer for the period in which the seller occupied the property.
  • Transfer Taxes and Recording Fees
    This is the cost for transferring ownership of the property and recording the purchase documents. The fee is often calculated as a percentage of the sales price.

Insurance fees due at closing

  • Homeowner's Insurance
    This insurance covers replacement costs for damages caused by fire, wind or other disaster that might affect the value of the property. Typically, the insurance also includes personal liability and theft coverage.
  • Flood or Quake Insurance
    Additional hazard insurance coverage that is required for homes located in a designated hazard zone as established by the Federal Emergency Management Agency (FEMA). As we tour houses, I will let you know if the property resides in a hazard zone.
  • Private Mortgage Insurance (PMI)
    Insurance required for conventional mortgage loans when the borrower's down payment on the house is less than 20 percent of the loan value.
  • Title Insurance
    This policy protects both the buyer and lender by insuring a clear chain of title. (In other words, it insures that that the person who sells the house has the legal right to do so.)

Sellers: As we hammer out your deal, we'll not only work to get the optimal sales price, but we'll also push for lower closing costs. And once we've come to an agreement, we'll give a detailed list of the closing costs so you are informed of exactly where your money is going.

Buyers: If you are purchasing a house in Winston Salem, you'll be given a "Loan Estimate" (LE) of closing costs within three days of submitting your loan application and a "Closing Disclosure" no fewer than three days prior to closing. These estimates are based on the loan officer's previous experience and are required to be within an acceptable range so you're not surprised when you arrive at the closing table. We'll be glad to look through the estimate with you, answering your questions and highlighting any estimates of concern.