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Being a home buyer means understanding what the closing costs are. It is not always easy to be aware of them and to understand what the additional fees are like. A lot of people forget about specific costs or assume they are lower than they end up being. This leads to not having enough funds ready to handle those fees and/or closing costs. To keep things simple, we are going to highlight all of these costs here in this article.
The total closing costs are going to be different in each situation. This depends on the lender, interest rate, mortgage loan, location of the property, and the total loan amount. It is best to go through the Closing Cost Calculator to get a more accurate number to work with. Or you can get a custom rate and closing cost quote for free. It takes less than 30 seconds to see your options.
For the most part, it is going to end up being somewhere between 0.5% to 5.0% of the mortgage loan amount. This can include service, title, and/or lender fees. These fees are added to the down payment that is given at the time of purchasing a home. In some cases, these costs are rolled into the loan amount and then spread throughout the course of the loan in the form of higher monthly payments. While this is easier in the short-term, it does lead to a higher interest payment per month.
Closing Costs for Home Refinance Loans
For those refinancing a mortgage loan at a lower rate, there will be closing costs too. The same goes for those looking at a home refinance loan for additional cash. These costs are not as high as buying or selling the home, but they will be there.
Basic Atlanta Closing Costs
Let’s take a look at some of the basic closing costs associated with this process in Atlanta.
Loan Origination Fees
This is going to come in the form of a nominal fee by the lender. The amount ends up being 0.5% to 1% of the total loan. This fee is paid for reviewing the application and the funding of the home loan. It also is a payment for the credit check that is done. It can end up being $200 for this check along with the additional fees associated with the lending process. All of these are added to the initial cost.
When it comes to processing and completing the transaction, it’s important to have a licensed real estate attorney on hand. This is a legal stipulation in the state of Georgia. The lawyer is going to be expected to work with a trusted mortgage broker and is going to put together a complete purchase contract. They will also help with the handling of escrow, when it is time to move forward with the property deed and/or other legal documentation. Having a good real estate lawyer is a must when it comes to representing the buyer’s lender. Georgia has specific regulations when it comes to this step. A good lawyer will be necessary and often does things an escrow company would in other states.
There are going to be real estate attorney fees that need to be paid for. These tend to be hourly fees that add up based on the amount of legal work that is done and how complex the process was. Some lawyers believe in a flat fee and will state this right away, while others maintain a fee based on the mortgage total and take a percentage from it.
Real Estate Transfer Tax
There is going to be a state real estate transfer tax to account for when it comes to transferring the property to the buyer. This is a tax that is negotiated beforehand. It tends to come out to be $1 for every $1,000 on the property’s value.
Georgia does not have high property taxes in comparison to other states. However, the property tax will have to be paid. There is going to be a prorated payment for the first tax payment and it will be highlighted in the closing costs.
A homebuyer is going to have to move forward with insurance and this is the only way to get the mortgage approved. In some cases, the insurance can be added to the mortgage payments, but some people prefer to have them handled separately. The main purpose is to make sure there is homeowners’ insurance in place for the loan to go through. There are specialized insurance policies that are needed in some parts of the state due to potential flooding protection.
Property Appraisal and Home Inspection
When it is time to go out and buy a home, there are a few details that stand out like these two. When a home is purchased, there will be two tests that are done by the lender. The lender is going to have a separate independent home appraiser come to evaluate the property’s worth. This will set the tone for how much the lender is willing to give out in the form of a mortgage to the borrower. If the valuation is low, this can lead to additional stress tests by the lender.
There will also be a home inspection to determine what shape the property is in. Sellers have to state all problems with the house beforehand. The home inspection acts as a safety net to ensure there are no hidden problems to deal with. If there is something that comes up, it is going to delay the process until it is remedied or the price is renegotiated.
Private Mortgage Insurance
In some cases, home buyers will prefer to move forward with private mortgage insurance. This happens when a down payment less than 20% is made by the buyer. This can happen with specific loans such as USDA, FHA, or VA loans. It is also possible for there to be a PMI premium, but most cases will have the payment added to the monthly mortgage payment.
These are the main costs to think about when it is time to move forward with a closing in Georgia. It is important to be aware of these details and to reach out to the Moreira Team for further information. We are ready to help every step of the way when it is time to get a pre-approved mortgage.