Most buyers plan carefully for the down payment. What catches people off guard is everything else: the money due before closing, the costs rolled into closing day, and the bills that start the month after you get the keys. None of these are secret, but they’re easy to underestimate. Here’s what to budget for when buying a home in North Carolina.
Money you’ll spend before closing
The due diligence fee
In North Carolina, buyers usually pay a due diligence fee directly to the seller when the contract is signed. It’s credited toward your purchase if you close, but in most cases you won’t get it back if you walk away. It’s real cash that leaves your account weeks before closing. Learn more about the due diligence fee in North Carolina.
Earnest money
Your earnest money deposit goes to an escrow agent and is also credited at closing, but it has to be available right away.
Inspections
A general home inspection is only the start. Depending on the house, you may also want a termite (wood-destroying insect) inspection, a radon test, a sewer line scope, or a specialist’s look at the roof, HVAC or foundation. Homes on well and septic, which are common in rural parts of Davidson, Randolph and surrounding counties, may need their own tests. Our home inspection guide for NC buyers covers what to order.
The appraisal and a survey
Your lender will charge for the appraisal, sometimes up front. A survey isn’t always required, but it’s worth considering for older lots, fences near property lines, or land.
Money due at closing
Closing costs
Loan fees, the closing attorney’s fee, title insurance, recording fees and more. See what closing costs NC buyers should expect for a full breakdown.
Prepaid items and your escrow account
This is the one that surprises people. If your lender collects taxes and insurance with your payment, you’ll usually prepay the first year of homeowners insurance and put several months of property taxes and insurance into an escrow account at closing. You may also prepay interest for the rest of the month you close. These aren’t fees, but they are cash you need at closing.
Our cash-to-close calculator pulls these pieces together so you can see a realistic total before you make an offer.
Costs that start after you move in
Property taxes
North Carolina property taxes are set by your county, and by your city or town if you’re inside city limits. Two homes at the same price can have noticeably different tax bills depending on location. Counties also reassess values periodically, which can change your bill. Look up the current rate for the exact address before you buy.
Homeowners insurance
Premiums depend on the home’s age, the roof, the location and your coverage. Get real quotes during due diligence, not after. If the home is in a flood zone, flood insurance is a separate policy and may be required by your lender.
HOA dues
If the home is in a homeowners association, ask for the current dues, what they cover, and whether any special assessments are planned. Our guide to buying a home in an HOA lists the documents to request.
Utilities and services
Ask the seller for a year of utility bills. Older homes, larger homes and homes with electric heat can cost much more to run than you might expect. Also budget for trash service where it isn’t provided by the town, internet, and water and sewer.
Maintenance and repairs
A common rule of thumb is to set aside around 1% of the home’s value each year for maintenance, more for older homes. Roofs, water heaters and HVAC systems all wear out eventually, and it’s much easier when there’s money waiting.
Moving and setting up
Movers or truck rental, changing the locks, window coverings, a lawn mower, and the furniture a new space seems to need. None of it is large on its own, but it adds up fast.
How to avoid the surprise
- Get a Loan Estimate from your lender early and read the “cash to close” line.
- Look up the property tax rate and get an insurance quote for each home you’re serious about.
- Keep a cushion in savings after closing, not just enough to get to the closing table.
- Use our mortgage and affordability calculator to see the full monthly payment, not just principal and interest.
Frequently asked questions
How much cash do I need besides my down payment?
It varies with the price, the loan and the lender, so ask your lender for a Loan Estimate. Remember to count the due diligence fee, inspections and prepaid items, not just closing costs.
Can the seller pay some of these costs?
Seller concessions can cover many closing costs and prepaid items, within your loan’s limits. They generally can’t reimburse costs you paid before closing, like inspections, or cover moving costs, and they can’t be used for the down payment.
Why is my first mortgage payment higher than I expected?
Usually because property taxes and insurance are included in the payment. Always compare total monthly payments, not just the loan amount.
Buying in the Triad and want a realistic budget? Talk to a Mantle Realty agent before you start touring.
