What are closing costs? How much are they?

When thinking about buying a home, every buyer asks the question - how much does it cost to buy a home? Well, let's go over it. 

For the sake of easy math, I'm going to assume that the house we are "purchasing" in this article costs $100,000.00

The first costs you will incur when purchasing a home are:

1. Earnest Money - typically 1% of the sales price. So in our case, $1,000. 

This money is your "security" so to speak. Putting up this money at the beginning shows the seller that you have every intention of buying the home. It also gives the seller the security of knowing that if you back out, they get to keep the earnest money since they took the home off the market and potentially lost other buyers in doing so.

2. Inspection - This cost will depend on the size of the house, but most likely for our subject house, it would cost approximately $400.00. 

This is the best $400 you'll ever spend. The report the inspector generates for you is usually close to 40 pages long and goes into detail about everything they inspect. 

3. Appraisal - depending on your lender, this can range from $400-$600, and once the appraisal in completed, this is non-refundable. 

Getting an appraisal done is required when you're obtaining a mortgage, it's the bank's reassurance that the home is worth what you've agreed to pay for it. 

Once you've moved past all of those, we move on to actual closing costs. 

Closing Costs in Georgia include:

1. Lender Fees

1. Origination fee - somewhere around 1% of the loan value. 

2. Points - any additional points you elected to pay to reduce your interest rate

3. Appraisal Fee - If you already paid this, there will be a credit on the closing statement. 

4. Credit Report Fee - around $50-100 depending on your lender. 

5. Flood Certification Fee - only when deemed necessary by your lender. 

6. Daily Interest Charges - from the date of closing to the end of the month. This can vary based on the closing date & interest rate.

7. Mortgage Insurance Premium - Only applies if your down payment is LESS than 20%

2. Setting up your Escrow Account - a few months of each of the following will be collected at closing so that when they come due, there will be ample funds available to make the payments.

1. Homeowner's Insurance

2. Mortgage Insurance (when down payment is less than 20%)

3. Property Taxes

4. HOA

3. Title Charges & Title Insurance

1. Settlement Fee For Closing Attorney - Approx $600.00

2. Owner's & Lender's Title Insurance - Approx $450.00

3. Title Exam, Title Binder, & any other Document Prep Fees (ex. Power of Attorney) $325.00 including POA

4. Government Transfer Fees

1. Recording of the Deed & Mortgage - Approx $60.00

2. State Transfer Tax - $1 for every $1,000 on the purchase price

3. Intangibles Tax - $3 for every $1,000 on the loan amount (null if no mortgage)

As you can see, it can cost a large amount of money to purchase a home. If you're not sure if you're quite ready, and you have questions you need answered, feel free to call me any time. On a $100,000 home, you can assume that your closing costs will total to somewhere between $3,500 and $4,000. It can be higher depending on your situation - so be sure to talk to your Realtor or your lender about specifics.

There are still some fantastic programs out there that allow buyers low or no down payment as well as the opportunity to finance their closing costs. Now this is not always ideal, but the important thing to remember is that there are options. 

Happy Buying and Selling!

Brittany Purcell - Athens Area Realtor

Associate Broker - Keller Williams Realty 

www.Athen-GA-Homes.com 

Brittany@BrittanySells.com

706-389-0771