Buying A Home In Atlanta – Here’s Everything You Want To Know About Closing Costs

By Alvaro Moreira
5 min read

Most potential homebuyers find it difficult to get a hang of the closing costs. They know that these costs are in addition to the mortgage and home purchase. Some people overestimate them whereas others underestimate these costs. Overestimation may scare some buyers away from thinking of purchasing a home. This quick guide is aimed at buyers who want clarity on the extent of closing costs in general and specifically in Atlanta, GA.

closing costs

There Are A Few Factors That Affect The Overall Closing Cost Including:

Amount of mortgage

Location

Mortgage lenders

Type of mortgage

Check out our detailed Closing Cost Calculator to get a better hang of the overall closing costs you’re expected to pay and the prevalent mortgage rates in Atlanta, Georgia.

Closing costs can amount to anywhere from 0.5 to 5.0% of the loan amount. A homebuyer is expected to pay these costs such as service fees, title costs as well as lender fees on closing of the transaction along with the down payment. In short, you will be paying the down payment and the closing costs when buying a home.

There are options to avoid paying these closing costs upfront. You will get the option of having these costs included in your total mortgage amount and repay them with the mortgage. Naturally, your monthly mortgage payment will go up and so will the total amount you will have to pay back over time.

Mortgage Refinance — Associated Closing Costs

Mortgage refinance loans are extremely common. People usually take these to get another mortgage at a lower rate or to get a part of their equity in a home. These transactions also have some associated closing costs that are not as high as buying a new home but you should be aware of these closing costs to get an idea of the overall expense of taking a mortgage refinance loan.

Closing Costs in Atlanta

Here is a brief list of a majority of the closing costs a homebuyer is expected to pay when buying a home in the state of Georgia:

Application Fee

This is known as the loan origination fees. This is the fee you pay to the mortgage lender to open your account and review the application beginning from the pre-approval stage to closing of the transaction. It typically ranges from 0.5% to 1.0% of the mortgage amount. Expect to pay a fee of up to $200 for every applicant for a credit check.

Licensed Real Estate Attorney

Georgia requires every real estate transaction to have a licensed real estate attorney involved. The attorney is a representative of the lender. They work with a mortgage broker and are responsible for drafting the purchase contract as well as acting as an escrow agent for processing of property deeds and related legal documents. The work done by escrow or title companies in other states is performed by the real estate attorney in the state of Georgia.

Attorneys charge at different rates. Some charge a fee by the hour and complicated transactions typically involve a higher charge. Some attorneys like to work at a standard flat fee whereas others have a sliding scale that goes up with the loan amount. Whatever be the case, the cost of having an experienced attorney by your side in a real estate transaction is worth it.

Transfer Tax

Every real estate transaction in Georgia requires payment of transfer tax. The law states that home sellers are required to pay this tax but more often than not, it is buyers who end up paying it. The property is taxed at 0.1% of the property value.

Prorated Property Taxes

Property taxes in Georgia are lower as compared to other states. The rates are different in different parts of the state but as a home buyer, a prorated first property tax payment is expected to be paid by the buyer and it is typically part of the closing costs.

Insurance

There are all kinds of insurance policies but when it comes to real estate transactions, buyers have to show the proof of homeowner’s insurance to the mortgage lender before they will release the funds. Similar to other closing costs, the cost of insurance can also be included in the total mortgage amount which means it will become part of the monthly mortgage payment though you also have the option to pay for it independently. Depending on the location, additional insurance might be required for covering storm damage or flooding or some other natural disaster.

Cost of Home Inspection and Property Appraisal

Every property transaction is typically accompanied by the cost of property appraisal and home inspection. All mortgage lenders typically require these two tests before funding the loan. In most cases, a third-party home appraiser is engaged by a mortgage lender to independently determine the market value of the property. 

If you have already agreed to a purchase price with the seller, the appraised market value should be within a particular range of this agreed-upon price. If the appraised value is significantly lower than the agreed-upon purchase price, you should be ready to renegotiate or expect funding delays.

A home inspection is required to determine the condition of the property. It’s legally binding upon sellers to let potential buyers know of any major problems but a home inspection is a further guarantee for the lenders and homebuyers. If something big is discovered during the home inspection, you should expect renegotiations or funding delays.

Mortgage Insurance Premium

In most cases, 20% down payment is expected. However, lenders will still approve a mortgage even when the down payment is less than 20% but they require borrowers to pay for a mortgage insurance premium or private mortgage insurance. USDA loans, FHA loans, and VA loans typically include it. You have the option to pay the premium independently but most such loans tack on the premium to monthly mortgage payment until the monthly payment is within the threshold.

Overall, these are the standard closing costs a buyer is expected to pay when purchasing a home in the state of Georgia. If you have any queries regarding the mortgage or you are planning to settle in the Atlanta area, get in touch with the Moreira Team today. Our experts can help you get preapproved and figure out the expected closing costs you may be required to pay when buying a property in Atlanta.