Congratulations! You are just steps away from completion of your new home. But before you officially get the keys, one of the last steps is paying closing costs.
Closing costs are taxes and fees associated with the sale of a home, such as title insurance and loan fees. Let’s break down what closing costs are in Georgia, who pays them, and what you can expect to pay as a buyer and seller.
What are the closing costs in Georgia?
In addition to a down payment, homebuyers also need to pay closing costs to get the keys to their new home. Closing costs in Georgia typically range from 2%-5% of the home purchase price. However, keep in mind that closing cost amounts depend on many factors, such as the buyer’s loan program or negotiations with the seller.
Let’s say you’re buying a home in Atlanta, where the median sales price is $429,990. Based on this, you can expect closing costs to be between $8,600 and $21,500. However, if you buy a home in Marietta, where the average sales price is $450,000, closing costs could range from $9,000 to $22,500.
Who Pays Closing Costs in Georgia?
Typically both the buyer and seller pay closing costs. But buyers and sellers will pay different closing costs and may have different total closing cost amounts. Keep in mind that it’s common for the buyer to pay closing costs out of pocket, while the seller’s closing costs are deducted from the home sale proceeds.
Buyer Closing Costs in Georgia
Closing costs for Georgia homebuyers tend to be between 2% and 5%. If you pay a security deposit (usually 1%-3% of the home price), this amount will be deducted from your closing costs. Here are some common closing costs that buyers typically bear:
- Assessment fee: Your mortgage lender will require a home appraisal to make sure the home is worth equal to or greater than the loan amount. A home appraisal typically costs between $300 and $500, depending on location. If you pay at the time of service, it will not be included in your closing costs.
- Inspection fees Although not required, a home inspection is highly recommended. The cost of a home inspection generally ranges from $300 to $500 and is usually paid at the time of service. However, if not, payment will be required at closing.
- Loan origination fee: Your lender may charge a fee to create your loan. It’s important to understand what this fee covers and whether it can be negotiated to avoid high fees.
- Loan processing fee: In addition to the origination fee, your lender may charge fees to process your loan. This typically covers coverage and related services. It is recommended to discuss this fee with your lender to see what is covered and if it may be waived.
- Loan discount points: If you purchase discount points to lower your interest rate, you’ll pay a one-time fee at closing. These points can lower your rates by 0.25% to 0.5%, but consider your long-term homeownership plans before paying the reduced rate.
- Private Mortgage Insurance (PMI): If the down payment is less than 20%, PMI may charge an upfront fee at closing, depending on the loan type. It is usually part of your monthly payment, but some loans offer the option of paying it as a one-time fee.
- Title Insurance: Title insurance is a one-time fee paid as part of the closing costs. Buyers often carry both lender and owner title insurance.
- Home Insurance: Your annual home insurance premium may be included in your closing costs in Georgia.
- Homeowners Association Dues: If your property is part of a homeowners association, you may be required to pay one month’s dues upfront at closing. These fees vary and add to maintenance and operating costs.
- property tax: As part of your Georgia closing costs, you may be required to prepay a portion of your property taxes at closing.
Georgia Seller Closing Costs
Closing costs borne by Georgia sellers can vary, but here are some common fees and costs sellers pay:
- Real estate agent commission fees: These fees can be a significant cost for sellers. Commission fees may vary and are subject to negotiation. Sellers should discuss their options with an agent.
- Homeowners Association Fees: If the property is part of a homeowners association, the seller is generally responsible for settling any unpaid HOA fees or assessments as of the closing date. Additionally, the seller may be required to provide certain HOA documents to the buyer as part of the sale.
- property tax: The seller is responsible for any property taxes accrued but not yet paid prior to the closing date. These unpaid property taxes are usually prorated based on the months you owned the property.
- Title Insurance: As part of a Georgia seller’s closing costs, the seller may pay for owner’s title insurance. Typically, this cost is based on the sales price of the home.
- Transfer tax: In Georgia, the state imposes a tax on the transfer of real estate ownership. The seller may be required to pay a one-time transfer tax as part of the closing costs. Local governments (such as counties and cities) may also impose additional taxes.
Median home sales price data from the Redfin Data Center for July 2024.
