Factors in Your North Carolina Mortgage Payment
Property taxes are one of the first things to consider as an added cost to homeownership. In North Carolina, you can expect to pay roughly 0.70% of your home value. This is the 15th-lowest state effective tax rate in the nation.
North Carolina property taxes are based on the value of the property, which is determined by a county assessor at least once every eight years. Property tax is collected and determined by the county in which your home is located, and is not collected at the state level. Certain cities, counties and tax districts will collect additional taxes for certain services, such as fire protection. Certain populations can apply for property tax relief in North Carolina. This includes elderly persons, disabled veterans and disabled persons over 65.
After taxes you’ll want to consider homeowners insurance. North Carolina homeowners pay an average of $2,112 per year for a policy.
While the majority of homes in North Carolina aren’t on the coastline, for those considering coastal property, additional insurance will be a consideration. Hurricane Sandy resulted in $57 million in private insurance claims in North Carolina, and two of the most hurricane prone counties in the U.S. are in North Carolina. In 2013, only about 9% of all insured property in North Carolina was located in a coastal area, but the total insured value was worth $163.5 billion, according to the Insurance Information Institute. Those looking for coverage can apply for coverage under the National Flood Insurance Program.
For homeowners who can’t qualify for insurance coverage on the private market, North Carolina has the Fair Access to Insurance Requirements (FAIR) Plan, also known as the North Carolina Joint Underwriting Association (NCJUA). This tax-exempt association is a market of last resort that provides basic property insurance. For those in coastal areas, NCJUA has a sister organization called the North Carolina Insurance Underwriting Association (NCIUA) which is known as the Coastal Property Insurance Pool. It provides basic property insurance for those in beach and coastal areas.
A financial advisor can help you understand how homeownership fits into your overall financial goals. Financial advisors can also help with investing and financial planning - including retirement, taxes, insurance and more - to make sure you are preparing for the future.
Costs to Expect When Buying a Home in North Carolina
Further costs to include in home buying is the price of a home inspection prior to closing on a property. You’ll likely want to hire someone as your due diligence about the condition of the property. It’s always best to get the most complete picture of the home you’re planning to buy. Home inspections cost between $225 and $525, with larger homes at the upper end of the range, and condos and smaller homes at the lower end. Optional add-on tests include mold, radon, termite and infrared, which you can arrange if you want. While inspections aren’t a requirement of a contract (unless it’s a specialized loan), it’s a prudent step to take before making the big financial decision of buying a home. In some cases, it can help you negotiate the asking price or repairs.
After the inspection period, you’ll continue with the home buying process and eventually make it to the final step: closing. At the time of closing, you’ll be required to pay a number of fees for various services ranging from your mortgage lender’s origination fees, to the county clerk’s charges. These fees are collectively referred to as closing costs.
Average Closing Costs by County
| County | Avg. Closing Costs | Median Home Value | Closing Costs as % of Home Value |
|---|
| Alamance | $3,381 | $154,800 | 2.18% |
| Alexander | $3,292 | $136,500 | 2.41% |
| Alleghany | $3,308 | $139,800 | 2.37% |
| Anson | $2,708 | $91,200 | 2.97% |
| Ashe | $3,373 | $153,200 | 2.20% |
| Avery | $3,328 | $144,000 | 2.31% |
| Beaufort | $3,274 | $132,800 | 2.47% |
| Bertie | $2,605 | $82,200 | 3.17% |
| Bladen | $2,755 | $95,300 | 2.89% |
| Brunswick | $3,734 | $212,200 | 1.76% |
| Buncombe | $3,860 | $238,200 | 1.62% |
| Burke | $3,214 | $120,700 | 2.66% |
| Cabarrus | $3,690 | $203,100 | 1.82% |
| Caldwell | $3,201 | $118,100 | 2.71% |
| Camden | $3,718 | $208,800 | 1.78% |
| Carteret | $3,743 | $214,100 | 1.75% |
| Caswell | $3,174 | $112,800 | 2.81% |
| Catawba | $3,326 | $143,600 | 2.32% |
| Chatham | $4,071 | $281,700 | 1.45% |
| Cherokee | $3,401 | $159,100 | 2.14% |
| Chowan | $3,266 | $131,100 | 2.49% |
| Clay | $3,504 | $180,300 | 1.94% |
| Cleveland | $3,211 | $120,100 | 2.67% |
| Columbus | $2,681 | $88,900 | 3.02% |
| Craven | $3,396 | $157,900 | 2.15% |
| Cumberland | $3,286 | $135,300 | 2.43% |
| Currituck | $3,952 | $257,200 | 1.54% |
| Dare | $4,106 | $289,000 | 1.42% |
| Davidson | $3,319 | $142,100 | 2.34% |
| Davie | $3,467 | $172,600 | 2.01% |
| Duplin | $2,696 | $90,200 | 2.99% |
| Durham | $3,787 | $223,000 | 1.70% |
| Edgecombe | $2,645 | $85,700 | 3.09% |
| Forsyth | $3,402 | $159,300 | 2.14% |
| Franklin | $3,359 | $150,400 | 2.23% |
| Gaston | $3,329 | $144,200 | 2.31% |
| Gates | $3,346 | $147,700 | 2.27% |
| Graham | $3,222 | $122,300 | 2.63% |
| Granville | $3,386 | $156,000 | 2.17% |
| Greene | $2,678 | $88,600 | 3.02% |
| Guilford | $3,440 | $167,000 | 2.06% |
| Halifax | $2,652 | $86,300 | 3.07% |
| Harnett | $3,377 | $154,000 | 2.19% |
| Haywood | $3,501 | $179,700 | 1.95% |
| Henderson | $3,743 | $214,000 | 1.75% |
| Hertford | $2,678 | $88,600 | 3.02% |
| Hoke | $3,305 | $139,300 | 2.37% |
| Hyde | $3,316 | $141,500 | 2.34% |
| Iredell | $3,553 | $190,300 | 1.87% |
| Jackson | $3,581 | $196,100 | 1.83% |
| Johnston | $3,431 | $165,100 | 2.08% |
| Jones | $2,683 | $89,000 | 3.01% |
| Lee | $3,329 | $144,200 | 2.31% |
| Lenoir | $2,757 | $95,500 | 2.89% |
| Lincoln | $3,464 | $172,000 | 2.01% |
| Macon | $3,433 | $165,600 | 2.07% |
| Madison | $3,573 | $194,500 | 1.84% |
| Martin | $2,723 | $92,500 | 2.94% |
| McDowell | $3,207 | $119,200 | 2.69% |
| Mecklenburg | $3,859 | $238,000 | 1.62% |
| Mitchell | $3,393 | $157,400 | 2.16% |
| Montgomery | $3,199 | $117,700 | 2.72% |
| Moore | $3,755 | $216,500 | 1.73% |
| Nash | $3,251 | $128,200 | 2.54% |
| New Hanover | $3,886 | $243,600 | 1.60% |
| Northampton | $2,617 | $83,300 | 3.14% |
| Onslow | $3,391 | $156,900 | 2.16% |
| Orange | $4,278 | $308,800 | 1.39% |
| Pamlico | $3,386 | $156,000 | 2.17% |
| Pasquotank | $3,421 | $163,100 | 2.10% |
| Pender | $3,594 | $198,700 | 1.81% |
| Perquimans | $3,465 | $172,300 | 2.01% |
| Person | $3,226 | $123,100 | 2.62% |
| Pitt | $3,350 | $148,600 | 2.25% |
| Polk | $3,800 | $225,700 | 1.68% |
| Randolph | $3,231 | $124,100 | 2.60% |
| Richmond | $2,616 | $83,200 | 3.14% |
| Robeson | $2,529 | $75,600 | 3.35% |
| Rockingham | $3,174 | $112,800 | 2.81% |
| Rowan | $3,291 | $136,400 | 2.41% |
| Rutherford | $3,202 | $118,300 | 2.71% |
| Sampson | $2,686 | $89,300 | 3.01% |
| Scotland | $2,643 | $85,500 | 3.09% |
| Stanly | $3,303 | $138,900 | 2.38% |
| Stokes | $3,294 | $137,000 | 2.40% |
| Surry | $3,245 | $126,900 | 2.56% |
| Swain | $3,304 | $139,100 | 2.38% |
| Transylvania | $3,781 | $221,900 | 1.70% |
| Tyrrell | $3,184 | $114,800 | 2.77% |
| Union | $3,876 | $241,400 | 1.61% |
| Vance | $3,116 | $101,400 | 3.07% |
| Wake | $4,071 | $281,700 | 1.45% |
| Warren | $2,747 | $94,600 | 2.90% |
| Washington | $2,641 | $85,400 | 3.09% |
| Watauga | $3,859 | $238,000 | 1.62% |
| Wayne | $3,228 | $123,500 | 2.61% |
| Wilkes | $3,242 | $126,300 | 2.57% |
| Wilson | $3,229 | $123,600 | 2.61% |
| Yadkin | $3,275 | $133,100 | 2.46% |
| Yancey | $3,392 | $157,100 | 2.16% |
Our Closing Costs Study assumed a 30-year fixed-rate mortgage with a 20% down payment on each county’s median home value. We considered all applicable closing costs, including the mortgage tax, transfer tax and both fixed and variable fees. Once we calculated the typical closing costs in each county we divided that figure by the county’s median home value to find the closing costs as a percentage of home value figure. Sources include the U.S. Census Bureau, Bankrate and government websites.
North Carolina closing costs account for roughly 1.79% of a home's value, which is on the low end compared to other states. Some of the costs are for your mortgage lender. Fees include charges for underwriting, processing, broker services, document preparation, origination points and commitment. Each lender has its own fee schedule, so costs vary between different lenders.
You’ll also need to pay for a credit report, appraisal (an optional add-on, generally), attorney, flood insurance and survey. Some of these services are required for certain loans, and some are dependent on if your preference, such as having an attorney present at closing.
Unlike some of the other top 10 states for population, North Carolina doesn’t charge a mortgage tax, which is beneficial to buyers. Homebuyers will have to consider title insurance, however, which is an additional fee. Most lenders require a policy in conjunction with issuing the loan, which will protect the lender’s interests in the case of a title dispute. However, buyers have the option to purchase an owner's policy to protect themselves from future disputes. The North Carolina Department of Insurance has further information on the topic for those interested in learning more.
One last fee that’s usually paid for by the seller is North Carolina state excise tax for property conveyance. The tax is $1 per $500 of value. If the property is located in Camden, Chowan, Currituck, Dare, Pasquotank, Perquimans or Washington Counties, there’s an additional land transfer tax of 1%. While these fees are written in North Carolina statutes as responsibility of the seller, you’ll want to ensure that it’s detailed in the contract so you don’t have a costly surprise during closing.
Details of North Carolina Housing Market
North Carolina, home to coastline, mountains, farms and cities, is the ninth-largest state by population with an estimated 10.5 million residents. The largest cities are mostly located toward the central area of the state and include Charlotte, Raleigh, Greensboro, Durham and Winston-Salem.
The median home value in the state is $236,900, according to data from the Census Bureau.
Looking to live in one of North Carolina's larger urban areas? Property taxes in the state rank 15th-lowest in the country, based on Census data. The median home value in Charlotte is $258,000. Raleigh, home to North Carolina State University, has a median home value of $285,400. And if you're looking into the outdoor mecca of Asheville, you’ll have to shell out even more based on a median home value of $319,400.
Local Economic Factors in North Carolina
Although North Carolina was once known for agriculture and manufacturing, the state’s largest industries more recently have been finance, insurance, real estate, rental and leasing, according to the U.S. Bureau of Economic Development. However, North Carolina still has a large presence in the manufacturing business. In fact, the largest textile mill industry in the U.S. is in North Carolina. The state is also a significant employer in the automotive sector, thanks to companies such as Daimler Trucks and Caterpillar. And it’d be remiss to leave out the famed Research Triangle Park, which encompasses Duke University, North Carolina State University and the University of North Carolina at Chapel Hill.
North Carolina is home to the headquarters of several different 2022 Fortune 500 companies, including Bank of America, Lowe’s and Duke Energy.
The per capita personal income in 2021 was about $56,173 in North Carolina, compared to the national average of $65,148. As of December 2022, North Carolina’s unemployment rate was 3.9% compared to the national rate of 3.5%.
If you’re planning on working and living in North Carolina, you might be pleasantly surprised by taxes. While there is a state income tax, it’s a flat rate of 5.25%.
Sales tax in North Carolina is set at a base rate of 4.75%. Each county in North Carolina collects additional sales tax which ranges up to 3.00%. There also isn’t an estate tax, which means inherited property isn’t taxed by the state.
Ready to seriously consider a move to this Southern state? While there are many things to consider, one of the first should be if you can afford living in North Carolina. An easy way to estimate your costs is to compare the cost of living in your current location to your projected one.
For example, a single individual making $70,000 who lives in Cleveland, OH can expect to pay 2% less in Asheville, NC on average. The slight difference is due to a 3% decrease in food cost and an 8% decrease in housing costs. If that same individual moves to Raleigh, NC, there is a 8% increase on average. However, if a person making the same amount were to move from Virginia Beach, VA to Charlotte, NC, the difference is 13% lower in North Carolina on average. While there are certainly more costs to take into account as well as quality of life, you can get a baseline idea of expense by comparing location costs.
Mortgage Legal Issues in North Carolina
Homebuyers enjoy certain protections under the North Carolina’s Residential Property Disclosure Act law, such as required seller disclosures. The four-page document detailing the home and any issues won’t cover every single property concern (that’s where inspections and surveys come in handy), but will help add an element of transparency. If the seller doesn’t provide a disclosure within a set amount of time, the buyer can rescind the offer under certain conditions.
North Carolina also has laws and resources to help prevent predatory home loans. The North Carolina Department of Justice outlines tips for homebuyers and provides the contact information for the Commissioner of Banks which can help you verify that the lender you’re working with is licensed and credible.
Turning to North Carolina foreclosure processes, you’ll find that it’s relatively quick in this state. This is due to a large majority of non-judicial foreclosures, which means that lenders don’t have to initiate a lawsuit for a foreclosure. North Carolina lenders generally use deeds of trust and promissory notes when issuing home loans. Most of these loans will include a “power of sale” clause which is a pre-authorization for a lender to sell the property (foreclose) in the event that you don’t pay your mortgage, which is known as defaulting on a loan.
Lenders have to follow a series of steps with set timelines to issue notices and advance foreclosure proceedings. The homeowner does have the option to ask for a loss mitigation plan, which is something a state housing counselor can explain and help with. If the foreclosure goes through and the property sells, the homeowner does have the right of redemption for 10 days after the sale. This means if the homeowner somehow secures the necessary money to buy back the home, he or she has to do it within the 10-day period.
North Carolina allows lenders to pursue deficiency judgements. This means if the home sells for below the remaining balance on the home loan, lenders can sue for the remaining amount. There are a number of constraints on the judgement, however. If the lender itself is the high bidder at the foreclosure sale and has a winning bid that’s below the “true value” of the property, the lender can’t pursue the full amount. An example is if a borrower has a $300,000 mortgage and the lender wins the property at auction for $150,000. The lender can’t pursue the remaining $150,000 on the note if the borrower can prove that the “true value” of the home is less. In the past few years there have been a number of court cases pertaining to deficiency judgements. In May 2017, the North Carolina Supreme Court "held that a borrower may not defeat summary judgment simply by filing a sworn statement that the property’s value is equal to the indebtedness secured by the mortgage.” This means that borrowers have to secure evidence of the property’s value through appraisals or tax assessments.
North Carolina Mortgage Resources
Available Resources
| Resource | Problem or Issue | Who Qualifies |
|---|
| North Carolina Housing Finance Agency | Down payment assistance and Mortgage Credit Certificate. | First-time homebuyers, move-up homebuyers and military veterans. |
| USDA Rural Development - Single family loans | Offers payment assistance to increase an applicant’s repayment ability. | Applicants must be without decent, safe and sanitary housing; Be unable to obtain a loan from other resources on terms and conditions that can reasonably be expected to meet; Agree to occupy the property as your primary residence; Have the legal capacity to incur a loan obligation; Meet citizenship or eligible noncitizen requirements; Not be suspended or debarred from participation in federal programs. |
Homebuyers can turn to North Carolina’s Housing Finance Agency for assistance. The agency offers financing options to help make home buying affordable. Programs include down payment assistance, mortgage credit certificates, deferred second mortgages and a variety of educational resources. If you’re already a North Carolina homeowner, you can find resources such as free foreclosure counseling, home repair programs and more.
Those at risk or undergoing foreclosure can contact North Carolina’s State Home Foreclosure Prevention Project or the NC Foreclosure Prevention Fund. These agencies will help coordinate counseling and legal assistance and additional beneficial services.
Low-to-moderate-income homebuyers may want to check the USDA eligible property map to see if they qualify for this federally backed loan option. The property must be located in an area deemed rural, but luckily in North Carolina you’ll find plenty of areas that qualify.
All set to make your way to this state? We have some reading material to prep you. Check out 15 things to know before moving to North Carolina.
And if you’re ready to check mortgage rates and get prequalified, we have North Carolina’s current rates.
