Common Loan-Related Costs

If you are financing your home purchase, your lender will provide a detailed loan estimate that outlines expected costs. These numbers can vary, so it is worth comparing lenders and asking questions before choosing one.

Here are some common loan-related costs buyers may see.

Loan Origination Fee

This is a fee charged by the lender or mortgage broker for creating and processing the mortgage loan. Origination fees can vary from lender to lender, which is one reason it helps to shop around.

Points

Points are optional fees paid to the lender in exchange for a specific loan structure, often a lower interest rate.

One point equals one percent of the loan amount. For example, one point on a $100,000 loan would be $1,000.

Paying points may or may not make sense depending on your budget, interest rate, and how long you expect to own the home.

Underwriting Fee

This fee covers the lender’s cost to review your financial information and decide whether to approve the loan.

During underwriting, the lender looks closely at your income, credit, debts, assets, employment history, and the property itself.

Appraisal Fee

An appraisal is an independent estimate of the home’s value. The lender usually requires this to confirm that the property supports the loan amount.

The appraisal is different from a home inspection. The appraiser is focused on value. The home inspector is focused on condition.

Credit Report Fee

This fee covers the cost of pulling your credit report. The lender uses your credit history to help determine whether to approve the loan and what loan terms may be available.

Flood Determination Fee

This fee is paid to determine whether the property is located in a flood zone.

If the property is in a flood zone, your lender may require flood insurance. That insurance would be a separate cost.

Prepaid Interest

Prepaid interest is interest paid at closing to cover the time between your closing date and the start of your first full mortgage payment cycle.

This amount depends on your loan, interest rate, and the day of the month you close.

Mortgage Insurance

Depending on your loan type and down payment, your lender may require mortgage insurance.

Mortgage insurance protects the lender if the borrower defaults on the loan. It may be paid monthly, upfront, or in another structure depending on the loan program.

Title, Attorney, and Settlement Costs

In North Carolina, real estate closings commonly involve an attorney or settlement agent. These costs help cover the legal and administrative work required to transfer ownership properly.

Settlement Fee

This fee is paid to the settlement agent, escrow holder, or closing attorney for handling the closing.

Depending on the contract, this fee may be paid by the buyer, the seller, or negotiated between both parties.

Title Search

A title search reviews public records to confirm ownership history and look for liens, claims, or other issues connected to the property.

This helps make sure the seller has the legal right to transfer ownership to the buyer.

Document Preparation

This covers the preparation of legal documents needed for closing, such as the deed of trust, mortgage documents, note, deed, and other required paperwork.

Notary Fee

Some documents must be signed and notarized. A notary verifies the identity of the person signing and confirms that the documents were properly executed.

Attorney Fees

Depending on the transaction, both buyer and seller may have legal representation, or one attorney may handle certain closing responsibilities.

Who pays for specific attorney-related costs depends on the contract and details of the sale.

Recording Fees

Recording fees are paid to legally record documents with the county. Buyers commonly pay to record the new deed and mortgage, but the final responsibility depends on the agreement between buyer and seller.

Title Insurance

Title insurance protects against certain ownership or title problems that may be discovered after closing.

Lender’s Title Insurance

If you are getting a mortgage, your lender will typically require a lender’s title insurance policy. This protects the lender’s interest in the property.

Owner’s Title Insurance

Owner’s title insurance protects the buyer’s ownership interest in the property for as long as they, or their heirs, own it.

This is usually optional, but it is worth understanding. A home is a major investment, and title issues can be expensive to resolve if they appear later.

Inspection and Property-Related Costs

Several buyer costs are connected to learning more about the condition and details of the property before closing.

Home Inspection

A home inspection helps evaluate the condition of the property and identify repairs or concerns before closing.

Many home inspections commonly fall in the range of $300 to $600, though the actual cost can vary based on the size, age, and complexity of the home. 

Pest Inspection

A pest inspection checks for termites or other pest-related concerns. Some lenders may require this, so it is smart to ask early.

Pest inspections often range from $75 to $200, depending on the provider and property. 

Survey

A survey identifies property lines, easements, and other important details about the land.

Your lender may require a survey, but even when it is not required, a survey can be helpful for buyers. It can clarify boundaries before you plan fencing, landscaping, additions, or other improvements.

Home Warranty

A home warranty can help protect against certain unexpected costs related to major systems or appliances after closing.

Sometimes a buyer purchases a home warranty. Sometimes it is requested from the seller as part of the negotiation. Whether it makes sense depends on the age and condition of the home, the buyer’s comfort level, and the terms of the offer.

Insurance, Taxes, and Escrows

Some costs are connected to protecting the home and setting up your monthly mortgage payment.

Homeowner’s Insurance

Homeowner’s insurance protects you and the lender against certain losses, such as fire, wind, storms, and other covered hazards.

Lenders typically require proof of homeowner’s insurance before closing. Many buyers pay the first year’s premium before or at closing, and the lender may escrow future payments as part of the monthly mortgage payment.

Property Taxes

Property taxes are typically prorated at closing so that the buyer and seller each pay for the portion of the year they own the home.

If taxes have not yet been paid for the year, the buyer may receive a credit from the seller for the seller’s portion through the closing date.

If taxes have already been paid, the seller may receive a credit from the buyer for the buyer’s portion of the year after closing.

It can look confusing on a closing statement, but the purpose is simple: each party pays their fair share.

HOA Fees

If the home is in a neighborhood with a homeowners association, there may be HOA-related costs at closing.

These may include transfer fees, capital contribution fees, statement fees, or other administrative charges.

The current page notes that HOA transfer and capital contribution fees are generally charged to the buyer, but they can vary greatly by neighborhood and HOA. 

This is especially important in many Waxhaw and Union County neighborhoods, where HOA communities are common. It is worth identifying these costs early so they do not become a surprise later.

Due Diligence and Earnest Money

In North Carolina, buyers should also plan for due diligence money and earnest money when making an offer.

These are not exactly the same as closing costs, but they are important upfront costs that can affect how much cash you need early in the process.

Due diligence money is typically paid directly to the seller and is usually non-refundable. It gives the buyer the right to inspect, investigate, and decide whether to move forward during the due diligence period.

Earnest money is good-faith money that is usually held by a third party and may be refundable if the buyer terminates properly during the due diligence period.

Both may be credited toward the buyer at closing if the sale goes through.

Suggested Link: Due Diligence vs. Earnest Money

Why These Costs Matter

Understanding buyer costs helps you make better decisions before and during the home search.

It can affect:

• How much cash you need available

• Which loan program makes sense

• Whether a home fits your real budget

• How you structure your offer

• Whether you ask for seller-paid closing costs

• How you compare one home or offer strategy to another

The monthly payment matters, but so does the cash needed to get to closing. A clear plan helps you avoid surprises and keeps the process more manageable.

Helping You See the Full Picture

At Ivy & Trellis, we help buyers in Waxhaw and Union County understand the numbers before they get too far into the process.

That includes purchase price, down payment, inspections, due diligence, earnest money, lender fees, closing costs, HOA fees, and other expenses that may affect your decision.

Buying a home is a big step. You deserve clear guidance, honest explanations, and a plan that helps you move forward with confidence.

Preparing to Buy?

If you are thinking about buying a home in Waxhaw or Union County, we would be glad to help you understand the process, estimate your likely costs, and prepare for the next step.