Closing costs in Georgia typically run two to four percent of the purchase price for buyers. Here is where the money goes. Knowing what those costs cover, which ones you can shop for and which ones you can negotiate helps you plan your budget and arrive at the closing table without surprises.
This guide is general information to help you prepare. Your lender and closing attorney will give you exact figures for your transaction, and it is always wise to check with your own financial or tax professional about your situation.
What Closing Costs Are
Closing costs are the fees and prepaid expenses due when a home purchase is finalized, separate from your down payment. They pay the professionals and agencies involved in the transaction, set up your escrow account, and cover the legal work of transferring the property into your name.
Because the range of two to four percent depends on the price, your loan type and the specifics of the property, the actual number can vary quite a bit from one purchase to the next. A cash purchase usually has lower closing costs because there are no lender fees. A purchase with a mortgage, an HOA and prepaid taxes will be on the higher end.
Typical Items
Lender fees
If you are financing, your lender may charge origination or underwriting fees, credit report fees and other loan-related charges. Some buyers also choose to pay discount points to lower their interest rate. Compare lenders using the official Loan Estimate each one provides, which lays out these fees in a standard format.
Appraisal
Lenders require an appraisal to confirm the home’s value supports the loan. Mountain properties with acreage, unusual construction or limited comparable sales can take more time to appraise, so schedule early.
Title search and insurance
A title search confirms the seller has the right to sell and identifies liens or other issues. Lenders require a lender’s title insurance policy, and buyers can also purchase an owner’s policy to protect their own interest. An owner’s policy is a one-time cost that protects you for as long as you own the home, and many buyers consider it well worth it.
Attorney fees: Georgia is an attorney-closing state
Georgia is an attorney-closing state, which means a licensed attorney conducts the closing. The closing attorney handles the title work, prepares and reviews closing documents, collects and disburses funds, and records the deed. Their fees are part of your closing costs.
Recording fees
The county charges fees to record the deed and the security deed for your loan in the public records. Georgia also has an intangible recording tax on long-term loans secured by real estate, calculated on the loan amount, which buyers who finance should expect to see on their closing statement. The state real estate transfer tax, based on the sale price, is customarily paid by the seller.
Prepaid taxes and insurance
Prepaids are often the biggest surprise. Your lender may require you to pay your first year of homeowner’s insurance up front and fund an escrow account with several months of property taxes and insurance. You will also see prorations, which divide the year’s property taxes between buyer and seller based on the closing date. These are not fees so much as money set aside for bills you will owe anyway.
Any HOA transfer fees
Many mountain homes are in HOA communities with gates, private roads and amenities. Some charge transfer fees, initiation fees or require prepaid dues at closing. Ask for the HOA’s fee schedule early so it is included in your estimate.
Other Costs to Plan For
These are not always on the closing statement, but they are part of the cost of buying, especially in the mountains:
- Inspections: general home inspection, well flow and water quality, septic, radon and wood-destroying insect reports.
- Survey: particularly useful for acreage and properties with unclear boundaries.
- Flood insurance: required by lenders for homes in high-risk flood zones.
- Moving and setup: utility deposits, propane tank fills and immediate repairs.
Negotiable: Seller Contributions
Sellers can contribute toward closing costs within loan limits. Ask. A seller contribution, sometimes called seller concessions, is negotiated as part of your offer. Instead of lowering the price, the seller agrees to pay a portion of your closing costs at the table. This can be especially helpful for buyers who want to keep more cash on hand after closing.
Each loan program sets limits on how much a seller can contribute, often based on your down payment and the loan type. Your lender can tell you the limit for your loan. Keep in mind that a request for closing cost help is one more negotiating point, so in a competitive situation it may be weighed against offers that ask for less.
Ways to manage closing costs
- Shop multiple lenders and compare Loan Estimates line by line.
- Ask about lender credits in exchange for a slightly higher rate, and weigh the long-term cost.
- Time your closing thoughtfully. The closing date affects prepaid interest and tax prorations.
- Ask about first-time buyer or down payment assistance programs if you may qualify.
Common Mistakes to Avoid
- Budgeting only for the down payment and forgetting closing costs.
- Making large purchases or opening new credit before closing, which can affect your loan.
- Waiting until the last week to wire funds. Confirm wiring instructions directly with your closing attorney by phone using a number you know is legitimate. Wire fraud is a real risk.
- Skipping the review of your Closing Disclosure. You should receive it at least three business days before closing. Compare it to your Loan Estimate and ask about anything that changed.
No Surprises at the Table
Sherry provides an estimate early so there are no surprises at the table. We want you to know, before you write an offer, roughly what you will need to bring to closing. That makes it easier to decide how much to put down, whether to ask for a seller contribution and how much cushion to keep for moving in.
What to do this week
- Request a Loan Estimate from at least two lenders.
- Set aside a closing cost budget in the two to four percent range while you shop.
- Ask about HOA fees and transfer costs on any home you are considering.
- Talk with Sherry about a closing cost estimate for the price range you are shopping.
