The North Carolina housing market entered its fourth consecutive year of rising home prices in 2016, as the median home value in the state hit $149,500 at the end of March. The figure is just a tick below all-time highs set prior to the financial crisis of 2007 and 2008. A tightening market has caused price momentum to build in the last year, with inventories falling throughout the state as sales volumes continue to outpace new property listings. Housing inventories stood at about six months of sales in March 2016, down from nine months a year earlier. As prices in North Carolina have risen, so too have closing costs. While costs can vary widely depending on the property, the lender and other factors, many homebuyers in the state can expect to pay closing costs between 3 and 4% of home value.

Average Closing Costs in North Carolina

Average closing costs in North Carolina come in slightly higher than the national average. Based on a theoretical transaction that includes a 20% down payment and a $200,000 home loan to a homebuyer with excellent credit, the average closing costs in North Carolina amount to $1,911. Loan origination fees account for $1,036 of the total, while $875 goes to third-party fees for credit reports, appraisals, inspections and other standard services. Certain costs are not included in this average, such as local real estate transfer taxes, title insurance, homeowner's insurance and homeowner's association fees.

Breaking North Carolina fees down further, homebuyers pay an average of $713 in attorney fees associated with settlement, $620 for a property survey, $421 for a property appraisal and $125 for a home inspection. Other typical fee amounts include $75 for document preparation, $100 for postage and courier service, $75 for tax services, $21 for a credit report and $10 for flood certification. Actual costs vary depending on transaction details, local market prices and individual homebuyer decisions.

The nationwide average for closing costs is $1,847, including $1,041 in origination fees and $807 in third-party fees. Hawaii is home to the most expensive closing costs in the nation, at $2,163, on average, followed by New Jersey at $2,094. At the low end of the scale, Ohio closing costs average $1,613, followed by Idaho at $1,682 and Utah at $1,697.

What Goes Into Closing Costs in North Carolina

When a homebuyer submits a home loan application to a lender, that lender must provide a good faith estimate (GFE) of all associated closing costs within three business days. The GFE enables homebuyers to compare costs and terms across different lenders during the loan shopping process. A GFE in North Carolina typically includes the following fees.

Loan Origination Fee: Borrowers pay an origination fee to the lender for services associated with processing and preparing a loan. This fee is generally quoted as a percentage of the loan amount. Origination fees may be negotiable depending on current market conditions, the size of the loan and the interest rate on the loan. Origination fees are also known as underwriting fees or processing fees.

Appraisal Fee: An appraisal of home value is required to confirm that the sale price of a property is in line with its actual value and thus in line with the size of the loan. In North Carolina, the lender is generally responsible for selecting the appraiser and overseeing the appraisal process.

Attorney Fees for Settlement: In North Carolina, homebuyers require the services of a real estate attorney to handle the transaction settlement process. An attorney may charge a flat rate for settlement service or an hourly rate. Attorney duties typically include contract review, title search, document preparation and a host of other related services.

Title Insurance: Lenders require the purchase of title insurance to protect against costs associated with title defects, such as liens or judgments, that went unidentified during the title search. A separate policy may be purchased to cover the homebuyer, but this is not required.

Home Inspection Fees: While a pest inspection is sometimes requested by North Carolina lenders, comprehensive home inspections are usually optional for the homebuyer. A thorough home inspection by a licensed North Carolina home inspector is generally a good idea, as it alerts the homebuyer to defects and safety issues that may otherwise escape notice prior to closing.

Survey Fee: A survey is sometimes required by the lender to verify the official boundaries of a property.

South Carolina (SC): Average Closing Costs

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