Wondering how much cash you will need to close on a home in Raleigh? You are not alone. Closing costs can feel confusing, especially when you are trying to budget for your down payment and moving expenses at the same time. In this guide, you will learn what buyers typically pay, what is negotiable, and how to lower your cash-to-close in Wake County. Let’s dive in.
What closing costs cover
Closing costs are the one-time fees you pay to get the loan, transfer the property, and set up your new home expenses. Nationally, buyers often spend about 2% to 5% of the purchase price on closing costs, depending on the loan type, local fees, and negotiations. Your exact numbers will appear on your Loan Estimate and, later, your Closing Disclosure.
Loan fees
- Origination and application fees: Your lender may charge a flat fee or a percentage of the loan amount for processing. Buyers usually pay these, though you can sometimes offset them with lender or seller credits.
- Discount points: Optional upfront fees to reduce your interest rate. One point equals 1% of the loan amount. Buyers typically pay, unless the seller agrees to contribute as a credit.
- Underwriting, processing, and credit report: Standard lender charges, generally buyer-paid.
Third-party services
- Appraisal: Most lenders require an appraisal to confirm the property’s value. Buyers usually pay this fee.
- Inspections: Home, pest, septic, well, and specialized inspections are not lender-required but are strongly recommended. These are generally buyer-paid.
- Survey: If needed or required by the lender, a survey is typically paid by the buyer.
Title and settlement
- Title search and title insurance: Lender’s title insurance is commonly required and is buyer-paid. An owner’s title policy protects your equity. It is optional but commonly purchased in North Carolina. Who pays for the owner’s policy varies by negotiation.
- Settlement or closing fee: Charged by the closing attorney or settlement company. Payment is set by local custom and your contract, and can be negotiated.
- Recording fees: Wake County charges to record the deed and mortgage documents. Buyers often pay to record the mortgage. The deed recording allocation is typically negotiable.
Taxes, prepaids, and reserves
- Property tax proration: At closing, property taxes are split between buyer and seller based on the closing date and Wake County’s tax calendar. You will pay the portion that applies after you take ownership.
- Homeowners insurance: Lenders usually require you to prepay the first year’s premium at closing.
- Prepaid interest: You often pay daily interest from your closing date until your first mortgage payment.
- Escrow setup: Many lenders collect a few months of taxes and insurance to fund your escrow account.
Government and transfer taxes
- North Carolina excise tax: The state charges an excise tax on real estate transfers. In practice, the seller customarily pays this tax, but your contract can specify a different split.
- Local assessments: If there are any city or county assessments, confirm whether these are due or prorated at closing.
Other possible fees
- HOA transfer or initiation fees: If the property is in an association, buyers often pay to set up the account.
- Flood certification, courier or wire, and notary fees: These smaller items add up and are typically buyer-paid.
Wake County specifics to know
- Excise tax custom: In North Carolina, sellers usually pay the excise or deed transfer tax. Always confirm the allocation in your offer and purchase contract.
- Recording with Wake County: Recording fees are set by the Wake County Register of Deeds and vary by document type and page count. Your closing attorney or title company will quote current fees.
- Tax proration and escrow: Wake County bills on a defined tax schedule. At closing, taxes are prorated to reflect your ownership period. Your lender may also establish a tax and insurance escrow based on the calendar.
How much to budget
A quick way to estimate buyer closing costs is to start with 2% to 5% of the purchase price. Then layer in prepaids like insurance and escrows.
Sample math for a $350,000 home:
- 2%: $7,000
- 5%: $17,500
Your actual costs will depend on your loan product, lender and title fees, inspection choices, and negotiated credits. You will see an initial breakdown on the Loan Estimate within three business days of applying. Your final numbers appear on the Closing Disclosure at least three business days before closing.
To calculate cash-to-close, consider:
- Down payment
- Plus total closing costs
- Plus prepaids and initial escrow deposit
- Minus any earnest money already paid
- Minus any seller or lender credits
Ways to reduce your costs
Shop and compare
- Ask at least two or three lenders for comparable Loan Estimates so you can evaluate origination fees, rates, and points under the same scenario.
- Request quotes from closing attorneys or settlement companies for title and settlement fees. Compare the cost and coverage for owner’s title insurance.
Negotiate with the seller
- Request seller credits toward your closing costs. Credits are common and can cover a portion of your third-party fees or pay for rate buydowns, subject to your loan program’s limits.
- Combine credits with strategic timing to minimize prepaid interest if it fits your schedule.
Use assistance programs and gifts
- Look into statewide options from the North Carolina Housing Finance Agency and any City of Raleigh programs that may help with down payment or closing costs.
- If you plan to use gift funds, ask your lender for documentation requirements early in the process.
Optimize timing and loan choices
- Decide whether paying discount points to lower your interest rate makes sense for your breakeven timeline.
- If eligible for FHA, VA, or USDA loans, confirm their rules for seller concessions and allowed fees.
Scrub fees before closing
- Ask your lender about reducing or waiving any duplicative or unusually high charges.
- Review your Closing Disclosure carefully during the three-day window and flag any surprises immediately.
Timeline and what to bring
Key documents and deadlines
- Loan Estimate: Provided within three business days of your completed application. Use it to compare offers.
- Closing Disclosure: Provided at least three business days before closing. This is the definitive statement of your cash-to-close.
- Final walkthrough: Coordinate it close to your closing date so any credits for repairs or issues are reflected on the Closing Disclosure.
Day-of-closing checklist
- Government-issued photo IDs for all buyers
- Certified funds or confirmed wire instructions from the closing attorney or settlement company
- Final Closing Disclosure for reference
- Proof of homeowners insurance or binder
- Any power of attorney documents if needed
- Contact info for your lender, your agent, and the closing attorney or settlement company
Also, protect yourself from wire fraud. Always verify wiring instructions directly with a known contact at the closing office by phone before sending any funds.
Primary home or investment purchase
Whether you are buying a primary residence or an investment property in Raleigh, the core closing cost categories are similar. Loan programs and concession limits can differ, and some investment loans carry higher points or reserves. Clarify your strategy upfront so your lender can structure fees and credits to match your goals.
Make your Raleigh plan
Closing costs do not have to be a surprise. Start with a 2% to 5% estimate, shop your loan and title options, and use credits or assistance where available. If you want a clear cash-to-close plan tailored to your price point and timeline, schedule a quick consult with Levi Bennett.
FAQs
How much should a Raleigh buyer budget for closing costs?
- A practical starting point is 2% to 5% of the purchase price, plus prepaids like insurance, interest, and initial escrow, with exact numbers on your Loan Estimate and Closing Disclosure.
Who typically pays North Carolina’s excise tax in Wake County?
- By custom the seller pays the state excise or deed transfer tax, though the purchase contract can allocate this differently.
Can a Raleigh seller pay my closing costs?
- Yes, sellers can offer credits that reduce your cash-to-close or fund a rate buydown, subject to loan program limits and market negotiation.
When will I know my exact cash to close in Raleigh?
- Your lender must deliver a Closing Disclosure at least three business days before closing, which lists final fees, credits, and the amount you need to bring.
Are title insurance policies required for Raleigh homebuyers?
- Lender’s title insurance is typically required when you finance; an owner’s policy is optional but commonly purchased to protect your equity.
How are Wake County property taxes handled at closing?
- Taxes are prorated based on the closing date and the county’s tax calendar, so you pay the portion that applies to your period of ownership.
What payment forms are accepted at Raleigh closings?
- Most closing attorneys accept a wire transfer or a cashier’s check; always confirm wiring instructions directly with the closing office to avoid fraud.
