Closing Costs in Georgia

If you’re thinking about buying a home, you’ve probably heard people talking about closing costs. Well there’s
a lot of confusion about what makes up the closing costs and there’s a lot of
variables that go into determining them. So in this video I want to give you a
quick introduction to the closing costs in Georgia. So come join me! Hi, I’m Stewart Ebaugh, a realtor in the metro Atlanta area and just about on every transaction the question always comes up, “how much are the closing costs going to be?” Well, I wanted to put together this video that I could share with clients rather than try to explain it every single time. Closing costs are just what the name implies… the cost involved to close the transaction and transfer the ownership from the current homeowner to a new buyer. Now, there’s a lot of pieces to the puzzle that make up the closing costs, many of which are going on behind the scenes that buyers and sellers never see but there’s costs involved to do all that. And of course the government
has their hands in the cookie jar as well. Now, be aware that the closing costs
are different than the down payment. While there are loan programs that don’t
require any down payment, there’s still costs involved to close the transaction
and transfer that ownership. And the closing cost cannot be rolled into the
loan and financed, they must be paid separately. We’ll take a look at an
example here in just a moment but in general the buyer is responsible
for paying all the closing costs. However, it is still typical in our area that the
seller will agree to pay some negotiated amount toward the buyers closing costs.
And depending on the loan program that you’re using, it could be up to as much
as six percent of the sales price. Now, there’s really no one figure or one set percentage to determine what that will be. So let’s jump in and take a look at an example. The first set of numbers on the settlement statement will be the
Financial and Prorations and Adjustment section. In the Financial section, you can
see here that the contracted sales price of 222 thousand dollars. On the next line, the buyer had already given a one thousand dollar
earnest money deposit when they made the offer on the house so that reduces the
amount of money they still need. The next line is the loan amount that they’re borrowing. And after that is the seller credit of four thousand dollars. Now
that’s the lump sum amount the seller agreed to pay toward the buyers closing costs. And then there’s a lender credit. This amount will vary from lender to lender
and on every transaction. The next section shows the prorations and the
two most common you’ll see are the property taxes and the homeowners
association dues if there are any, based on the number of days that each
person owns the home during that year. Now let’s look at the lender charges.
This is where you’ll see a wide variety of charges and different amounts for
them based on the lender that you choose. Ultimately this is how you’ll compare
apples to apples when selecting your lender and not just solely based on the
interest rate. Before we hit the lender charges, let me draw your attention to
this first line called prepaid interest. Here the buyer’s paying five days worth
of interest for the rest of April so now they won’t have a payment in May and the
first payment will be due June 1st. Now we come to the lender section and as I said before these numbers will vary greatly from lender to lender, if some
lenders even charge some of these fees. So, running down the list real quick we
see $10 for the Georgia Residential Mortgage Act fee, doc prep fee, MERS fee, which is basically a registration fee to keep track of your original loan terms
as your loan may get sold from lender to lender to lender over the years. And the
next fees, origination, processing, underwriting, credit report, and appraisal
will all be different based on the lender. I have lenders that don’t charge
any of these fees, other than the appraisal fee but the appraiser has to be paid to go
out and do their job anyway. Now we have the flood certification which will be
required if you’re getting a loan. This particular one has an FHA loan on
it so it has the required Mortgage Insurance Premium, and then the post
closing fee, again some lenders may charge that and others may not. Next we have the Impounds, or what’s often called Prepaids. Here you can see the two amounts for homeowners insurance and property taxes. This is where your lender is setting up an escrow account that the lender will
pay your insurance & your property taxes out of each year for you. You’ll only have this section if you have a loan or if you put 20% down
your lender will probably let you pay your own taxes and insurance each year
yourself. And the last line there is an aggregate adjustment. The government
only allows the lender to hold so much money in the escrow account so if the
first two numbers exceed that then there’ll be an adjustment reducing that
amount. Next we come to the title charges, which are the costs the closing attorney incurs to do a title search and tax search, plus other fees
associated with their expenses for getting everything together and actually
doing the closing. If you have a loan, the lender will require you to pay for
lenders title insurance to cover their interest in the property if there’s ever
a title problem that comes up. And next is owners title insurance. Now this one
is strictly optional because it covers YOUR interest in the property if there’s
ever a title problem. The Commission section is blank on here because that’s a sellers responsibility. And last we have the government recording and transfer charges. And there are fees at the courthouse for the attorney to
record the documents after the home has been transferred to a new owner. And then we have the transfer tax which is one dollar for every one thousand dollars of
the sales price. And the intangibles tax, which is only if you have a loan, cash
buyers won’t have this, the intangible tax is three dollars for every one
thousand dollars of the loan amount, not the sales price. And the last section
shows the one year premium to pay for the homeowners insurance up front. There you have it. That’s a lot isn’t it? Well, my goal here is it to make you an expert
on closing costs in Georgia but just to give you a basic understanding of the
things that make them up and why it’s impossible to answer that question of
“how much are the closing costs going to be?” Every situation is going to be
different. If you’d like to talk more about them, or even to a lender or
closing attorney, free of charge, just reach out to me and I’ll connect you
with the appropriate expert if I’m not able to answer your questions. As a special bonus for sticking around to this point, grab a free copy of my home
buyer or home sellers guides at the links that you’ll find down in the video
descriptions, and if you haven’t already subscribed to my YouTube channel, go ahead and do that now by clicking on this link over here. And
click on that bell icon as well so you’ll be notified each time I post a
new video about real estate or our community. Thanks again for joining me ont his video and I hope you found it helpful. If so, give it a thumbs up, leave
me a comment, and share it with your friends. I wish you a blessed day and as
always, I look forward to seeing you… on the next one!

13 Replies to “Closing Costs in Georgia

  1. Awesome explanation of Buyers closing costs! Buyers need someone as versed as you to guide the through..It's alot to comprehend!!

  2. Closing costs are important for the buyers to understand upfront. Your example was very helpful in explaining some of the fees that are a part of these costs.

  3. It's such an important part of a real estate transaction. Also it is really great that you state that closing costs are different than down payment. Great information for clients.

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