Here at Madison Homebuilders, we pay standard closing costs for our clients in North Carolina and South Carolina.
If you are thinking about building a custom home in North Carolina, learn more in this guide about what is included in closing costs, the average cost, and how to avoid paying them.
Want to learn more? Check out our guide on down payments, construction loans, and closing costs.
What’s Included in Closing Costs?
In general, closing costs are made up of three kinds of fees:
- Lender Related Fees
- Third Party Fees
- Pre-Paid Costs
Closing, sometimes referred to as settlement, is the date you close on your home loan and receive the keys to the home. Homebuyers usually are responsible for paying any extra fees and costs charged by the lender and other third parties on this date. Closing costs are the sum of these fees and charges.
Closing costs often include credit checks, loan origination and processing fees, attorney’s fees, home inspections and appraisals, and points (upfront fees paid to get a lower interest rate on a mortgage), among others.
Examples of Origination Fees in NC
- Loan origination fees
- Processing/underwriting
- Document preparation fees
- Tax services
Examples of Third Party Fees in NC
- Home appraisal
- Attorney fees
- Credit report
- Flood certification
- Inspections
- Postage
- Survey
Examples of Pre-Paid Costs in NC
- Prepaid interest
- Property taxes
- Property/hazard insurance
(Note: The above charges must be paid by the buyers based on property value. These charges are the sole responsibility of the homebuyer and cannot be covered by a third party.)
Average Closing Costs in North Carolina
On average in North Carolina, standard closing costs range just over 2.2% of a home’s purchase price. For example, closing costs on a $200,000 home could add up to $4,400 or more. If you build with Madison Homebuilders, we would pay up to $5,000 towards your closing costs!
Since the founding of our company in 1997, Madison has paid over $2.6 million in closing costs on behalf of our customers, averaging over $3,900 per customer. Note that this average savings doesn’t include thousands of dollars saved by our customers by not having to pay construction loan interest.
How Can I Avoid Paying Closing Costs?
While the homebuyer usually pays closing costs, it is not unheard of for other parties to cover these fees.
Who Pays Closing Costs?
- The Seller: In the purchase of an existing home, the seller is always responsible for the real estate commission when the home closes, but sometimes you can negotiate with the seller to get them to cover part or all of your closing costs as well. Obviously this is more likely to happen if they are trying to sell the home quickly or if there aren’t other serious buyers. If they do agree to cover your closing costs, this is usually done by decreasing the purchase price of the home for an amount comparable to your closing costs.
- You: If you don’t have the cash to cover closing costs now, you can ask your lender about wrapping the closing costs into the loan. They will likely charge you for this, but when you’re already borrowing hundreds of thousands of dollars, it may not matter to you if you add more for closing costs.
- The Home Builder: It is not standard for home builders to help pay closing costs, but if you search hard, you can find strong, reputable companies that can afford to do this. Madison Homebuilders is one such company.
At Madison Homebuilders, we don’t require our clients to make construction down payments. Qualified landowners in both South and North Carolina do not pay any construction costs until their home is complete. That means no construction interest payments and your standard closing costs are covered. This adds up to thousands of dollars in savings, as well as a simplified homebuilding process.
Interested in learning more about financing your custom home build in South or North Carolina? Start by downloading your free home plan book today!