North Carolina Mortgage Rates

Living in North Carolina

North Carolina’s three distinct regions attract tourists and residents alike. The western part of the state offers the Blue Ridge and Smoky Mountains, small towns and plenty of outdoor attractions, while the state’s central Piedmont region contains the state’s largest cities and the Research Triangle, where its three major research universities are located. The coastal region lies farthest east in the state, and is known for its 300 miles of barrier island beaches.

Across the state, housing prices are on the rise. It’s not a particularly fast-moving seller’s market though. In 2017, the median value of a home in North Carolina was $171,000, according to data from the U.S. Census Bureau’s 2015-2017 American Community Survey. That’s a 3.4% increase from a year earlier, when the median value was $165,400.

Prices are rising more quickly in certain regions of the state, though. In the greater Triangle region, the median sales price increased 5.7% from April 2018 to April 2019, according to data from Triangle MLS. Meanwhile, in Charlotte, the median sales price jumped to 5.6% increase in the same period, the Charlotte Regional Realtor Association found.

That price movement suggests a seller’s market, where supply is tightening and buyers are competing to take what is available. Inventory in both the Charlotte and greater Triangle regions decreased from April 2018 to April 2019.

The rules and costs of buying a home in North Carolina

Acquiring a home in North Carolina isn’t as simple as signing on the many dotted lines. Like other states, it has rules around homebuying, foreclosures, the division of property in the event of divorce and closing on a home. Become acquainted with the policies that shape the housing market below.

Home seller and buyer laws

What must sellers disclose? North Carolina requires residential property owners to provide buyers with a disclosure of the property’s condition. Property owners selling their homes must use the Residential Property and Owners’ Association Disclosure Statement to do so. The form asks owners to provide information such as the year the home was built, details on its heating and cooling systems, whether it is susceptible to flooding and if it is embroiled in any zoning violations.

How does foreclosure work? In most cases, residential property foreclosures in North Carolina are nonjudicial foreclosures, which means the lender does not have to go through the court system to begin the process of foreclosure as long as the deed of trust contains what is called a “power of sale clause.” Under a power of sale foreclosure, a trustee has the power to sell the property on behalf of a lender if the borrower defaults. However, this can happen only after a court hearing authorizing the power of sale foreclosure.

How is property divided in divorce? North Carolina uses equitable distribution laws to divide marital property in a divorce. In an equitable distribution state, the couple’s property is divided equitably, based on the value of their assets. Assets are not necessarily subject to a 50/50 split. The couple might decide not to evenly split proceeds from the sale of a house in a divorce, or agree to allow one spouse to take the house and another to take an asset of equal value. If the court is involved in the division of property, it will take into account factors such as the duration of the marriage, the income and health of both parties and the need of a parent with child custody to keep the marital residence.

Does a lawyer need to be present during a home closing? Only licensed attorneys may perform services critical to a residential real estate closing in North Carolina. Those services include providing opinions on the title to a property, offering legal advice or counsel and drafting legal documents. The North Carolina State Bar considers a closing as a collection of specific services that involve the practice of law, and state law prohibits anyone who is unlicensed to practice law and not working under the direct supervision of a State Bar member from providing services that are considered legal services.

However, a professional who is not a lawyer can attend a closing and provide closing documents, direct the parties where to sign and receive and disburse funds for closing.

Taxes

North Carolina’s real estate transfer taxes are assessed at a rate of $1 per $500 in the home’s sale price, or 0.2%. This cost can increase depending on where you live. Seven counties in North Carolina — Camden, Chowan, Currituck, Dare, Pasquotank, Perquimans and Washington — also levy a local real estate transfer tax of about 1%, depending on the sale price of the home for sale.

Property tax bills in North Carolina are relatively low compared with the rest of the country. In fact, North Carolina has lower property tax rates than all but 14 of the 50 states, according to Tax-Rates.org. The average tax rate is 0.78%, making the median property tax in the state $1,209 based on a home worth the median value of $155,500.

North Carolina offers three property tax exemptions that can lower tax bills for homeowners who qualify. Homeowners who are 65 years or older, or disabled, can qualify for a homestead exclusion if they meet certain income requirements. Disabled veterans also qualify for an exemption if they sustained a service-oriented, permanent or total disability. The benefits also extend to the spouses of disabled veterans, as long as they have not remarried.

Another exemption, the Circuit Breaker, applies to residents who meet four qualifying conditions. They must be North Carolina residents and at least 65 years of age, and they must have owned and lived in the property as a permanent resident for five years and have an income of no more than 150% of the income eligibility maximum.

Conforming loan limits

In all but three of North Carolina’s 99 counties, the conforming loan limit for 2019 is $484,350 for one-unit homes. The three county exceptions are Camden, Perquimans and Pasquotank, where loan limits for single-unit homes are $625,500.

Conforming loans are residential mortgages that meet limits set by the Federal Housing Finance Agency (FHFA), and which are eligible for purchase by government-sponsored entities Fannie Mae and Freddie Mac.

Programs for homebuyers in North Carolina

The state of North Carolina has several programs to help homebuyers achieve their dreams of property ownership. The North Carolina Housing Finance Agency offers a number of programs with varying eligibility requirements to help homebuyers secure financing for their home purchase.

NC Home Advantage Tax Credit

The North Carolina Housing Finance Agency provides several programs, including the NC Home Advantage Tax Credit. This program offers the Mortgage Credit Certificate, which helps eligible first-time homebuyers and military veterans save up to $2,000 a year on their federal taxes. Applicants could claim a federal tax credit for 30% of the interest paid on an existing home, or 50% on a newly built home, up to $2,000 a year.

Who qualifies:

  • Borrower must be a first-time homebuyer, a military veteran or buying in one of North Carolina’s targeted census tracts
  • Must meet income and sales price limits
  • Must apply and be approved for a Mortgage Credit Certificate before buying a home
  • Candidate must occupy the home as the principal residence within 60 days of closing
  • The loan must be reviewed and approved by the NC Housing Finance Agency prior to closing

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NC Home Advantage Mortgage

NC Home Advantage Mortgage provides qualified individuals with fixed-rate mortgages and helps with a down payment of up to 5% of the loan amount. Eligible properties are single-family homes, townhouses, condominiums, duplexes and newly built homes.

Borrowers only have to repay the down payment options if they sell the home, refinance the mortgage or transfer the home before living in the home for 15 years. The down payment assistance will be forgiven at 20% every year at the end of years 11-15, with complete forgiveness granted at the end of year 15.

Who qualifies:

  • First-time and move-up (buying a larger, more expensive home) buyers
  • Borrower must be buying a home in North Carolina
  • Annual income must not exceed $87,500
  • Credit score must be at least 640 (or 660 for newly manufactured homes)
  • Must be applying for a loan through the Federal Housing Administration, U.S. Department of Agriculture, Veterans Administration or conventional loan through a participating lender and purchase a property below the price limits
  • Must live in the home as the principal residence within 60 days of closing

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NC 1st Home Advantage Down Payment

This program offers an $8,000 assist to a down payment. It is similar to the NC Home Advantage Mortgage, as a 0%, deferred second mortgage. The mortgage can be forgiven at 20% every year at the end of years 11-15. Complete forgiveness is granted at the end of year 15.

Who qualifies:

  • First-time home buyers or military veterans buying a targeted census tract
  • Borrowers must meet income and price limits
  • Must occupy the home as the principal residence within 60 days of closing
  • Must have a credit score of 640 or higher

Learn More

Rate shopping tips

You have learned a lot about how to search for your ideal home, and even how to get assistance buying it, if necessary. But no mortgage shopping journey would be complete without a few strategic tips to help you get the best deal. Here are several must-do items to think about as you move ahead.

Contact at least 3 lenders on the same day

Whether you choose a fixed- or adjusted-rate mortgage, rates can change on a daily basis. To get the most accurate comparison of rates, contact at least three lenders that you might want to work with on the same day. This will make it easier to compare rates and choose the best one.

Give each lender the same information

It’s important to give each lender the same information so you can more accurately compare offers. Provide lenders with your name, income and Social Security number to allow them to pull a credit report, as well as the property’s address, the loan amount and the estimated value of the property. Be as detailed and accurate about each type of information as possible. Regarding your income, for instance, gather documents such as W-2s and any income outside of salary or wages, such as public benefits or income from investments.

Add up all the lender fees to confirm the costs

Mortgage rates are not the only component to financing a home. Be aware of discount points and other fees, such as those for originations, closings, brokers, inspections and other costs that come with the process of buying a home. It’s important to add all of this up to make sure you know the total cost.

Know when to lock in the rate

Once you get a good offer, it’s important to lock in your rate. This will ensure your interest rate on the mortgage will not change, provided the information on your mortgage application remains the same through closing, and you close within a specified time frame. Rate locks generally last between 30 to 60 days.

Report any issues

If you encounter a problem with securing a mortgage, or feel that someone is dealing dishonestly with you, the North Carolina Department of Justice might be able to help. You can file a complaint about a mortgage or contact the department directly for help at 1-877-5-NO-SCAM.

The information in this article is accurate as of the date of publishing.