How to Calculate Closing Costs in Atlanta

Many home buyers are confused by closing costs. They know there will be some added fees to go along with the home purchase and mortgage loan. Some may underestimate the total costs of buying a home. Others might overestimate closing costs and other out-of-pocket expenses, which could scare them away from buying a home at all. We’re here to set the record straight and tell you some of the key things you need to know about closing costs in Atlanta, GA.

The total closing costs can vary based on the type of mortgage loan, the mortgage lender, the location and the loan amount. To get a more accurate idea of your total closing costs, feel free to check out our handy Closing Costs Calculator that also shows current average mortgage rates in Atlanta.

In general, you can expect to pay somewhere between 0.5% and 5.0% of the mortgage loan amount as additional closing costs. These lender, title and other service fees will be due upon closing along with your down payment, so that is the total amount you will be paying upfront when purchasing a home.

Some mortgage loan types and lenders may allow you to roll some or all of your closing costs into your loan amount if you want to spread out the payments over the life of your mortgage. Of course, this will increase your monthly mortgage payments and the total amount you will be paying over time (principal + interest). 

closing costs

Closing Costs for Home Refinance Loans

If you are refinancing your mortgage loan at a lower rate and/or using a home refinance loan to cash out some of your home equity, you can expect to pay some closing costs. These typically won’t be quite as much as a new home purchase, but it’s important to factor the closing costs into your overall expenses for a mortgage refinance loan.

Standard Atlanta Closing Costs

Here are some of the standard closing costs and fees you can expect to pay if buying a home in Atlanta or anywhere in Georgia:

Loan Origination Fees

Your mortgage lender will charge you a nominal fee for setting up your mortgage account. This is known as a loan origination fee and is generally around 0.5% to 1.0% of the total loan amount. This fee covers receiving and reviewing your home loan application, from the initial loan pre-approval to final funding of the home loan upon closing. Usually, a credit check is part of the loan origination process, which may account for up to $200 for each person on the application.

Attorney Fees

In the state of Georgia, it is mandatory to have a licensed real estate attorney involved in the transaction. They will be working with the mortgage broker, drafting your purchase contract and acting as the escrow agent to process property deeds and other important legal documents. The real estate attorney essentially represents the buyer’s lender. Georgia is different from many other states in this respect. The attorney will do much of the important work a title or escrow company might do in other states.

As for real estate attorney fees, some attorneys may charge by the hour and you could end up paying a higher rate for a more complicated transaction. Others might charge a standard flat fee for all real estate transactions or sliding scale based on the actual mortgage loan amount. Either way, having a good real estate attorney on your side is well worth the expense.

Georgia Real Estate Transfer Tax

Georgia home sellers are required to pay a state real estate transfer tax to transfer the property to the buyer. However, it is fairly common for this tax to be negotiated as something the buyer will pay. The transfer tax is calculated as $1 for every $1,000 in property value.

Property Tax

Georgia state property taxes are lower on average than most other states. Property tax due dates can vary across the state, but you can expect to pay a prorated first property tax payment as part of your closing costs as a home buyer.

Homeowner’s Insurance

As a home buyer, you are expected to have homeowner’s insurance set up before you can receive your mortgage funds. You may be able to roll your insurance into your mortgage payments or it can be arranged separately. You just need to have proof of your paid and active policy before the loan can be funded. In some Georgia locations, additional specialized insurance policies may be required to cover flooding or storm damage.

Property Appraisal and Home Inspection

These are two of the most important components of a home purchase. The home you are buying must pass these two tests before the mortgage lender can fund the loan. Your lender will hire a third-party home appraiser to determine the current market value of the property, which should fall within a reasonable range compared to your purchase price. If it is much lower, you could experience funding delays or have to renegotiate with the seller. 

In addition, there will be at least one home inspection required to see what kind of shape the property is in. Sellers are legally required to disclose known problems, but home inspections are a safeguard for home buyers and lenders to make sure there are no major problems. Again, funding delays or renegotiations may need to happen if something significant is found during the primary home inspection. 

Private Mortgage Insurance

Some home buyers will be required to pay private mortgage insurance (PMI) or a mortgage insurance premium (MIP) if they are providing a down payment that is less than 20% of the loan amount. This is common with mortgage loan programs like VA loans, FHA loans and USDA loans. There may be an upfront PMI premium, but in most cases the payments are simply tacked onto your monthly mortgage payments until you have surpassed the required payoff threshold.

These are the standard closing costs you can expect when buying a home in Georgia. If you are ready to make your move in the Atlanta area or have more mortgage questions, contact Moreira Team | MortgageRight today. We can help you get pre-approved for your home loan and calculate all the costs associated with your home purchase.