Closing Costs In Georgia Explained: The Full List
Georgia closing costs explained in this guide draw from my two decades as a real estate closing attorney in Georgia, where I’ve seen how these…
Georgia closing costs explained in this guide draw from my two decades as a real estate closing attorney in Georgia, where I’ve seen how these fees can derail even the most carefully planned home purchase or sale. Many clients save diligently for the down payment but completely overlook the various fees due at the end.
Over the years, I’ve seen countless buyers (especially first-time purchasers) arrive at the closing table unprepared for the full scope of costs beyond their down payment. The shock on their faces when they review the final numbers is something I never want my clients to experience.
Georgia Closing Costs Explained: What Makes It Unique?
Closing costs are the various fees and expenses you pay to finalize a real estate transaction. These costs are in addition to your down payment if you’re buying, or the proceeds you expect from selling your home. They cover the administrative and legal fees of transferring property ownership.
The Georgia Difference: Attorney-Run Closings
Georgia is unique because every real estate transaction must be managed and overseen by a licensed real estate attorney. You won’t find title company personnel handling the closing, unlike in many other states. This is a crucial difference for home buyers and home sellers to understand.
This requirement means attorney fees are a standard part of your Georgia closing costs. The significant benefit is that a legal professional is protecting your interests, ensuring all legal documents are prepared correctly. In my practice, I’ve caught numerous title search issues that could have cost a client a lot of money later on.
Average Costs: Setting Your Budget
Budgeting for typical closing costs prevents financial stress at the closing date. Your actual costs will depend on your loan type, the home price, and current market conditions.
Typical Closing Costs for Home Buyers
- Home buyers should plan for average closing costs between 2% to 5% of the home’s purchase price.
- For example, on a home with a purchase price of $300,000, this range translates to $6,000 to $15,000.
- These costs include lender fees, title insurance, and inspection costs.
Typical Closing Costs for Home Sellers
- Home sellers generally face higher total closing costs, typically 6% to 10% of the home’s sale price.
- This higher percentage is primarily due to real estate commissions, which alone account for 5% to 6% of the property’s sale price.
- On that same $300,000 home, a seller might pay $18,000 to $30,000 in total seller closing costs.
The Buyer’s Comprehensive List of Georgia Closing Costs
Home buyers need to understand every fee on their Loan Estimate and Closing Disclosure. These costs are categorized by the service they cover.
Lender-Related Fees (Mortgage Loan Costs)
These fees compensate your mortgage lender for creating and managing your mortgage loan. They are required if you are financing the purchase.
Loan Origination Fees and Discount Points
- Loan origination fees are a one-time fee charged by your mortgage lender to set up your loan. This usually runs between 0.5% to 1% of the total loan amount.
- Discount points are optional fees you can pay up front to secure a slightly lower interest rate over the life of the loan. Each point costs 1% of your loan amount.
Appraisal and Credit Fees
- Appraisal fees are paid for an independent professional to verify the home value for the lender. Expect to pay $400 to $600 for a standard home.
- Credit report fees cover the cost of checking your financial history, typically $25 to $50.
- Document preparation fees cover the generation of your loan paperwork, usually running $100 to $300.
Title and Legal Fees
These costs are vital for protecting your property ownership rights and ensuring a sound legal transfer.
Attorney Fees and Title Search
- Attorney fees or legal fees in the State of Georgia generally range from $500 to $1,500. This covers reviewing the contract, conducting the title search, and overseeing the entire closing process.
- A title search examines public records to confirm the seller is the property ownership and to check for any liens or claims. The cost is usually $150 to $300.
Title Insurance Policy
Title insurance protects you and your lender against title issues that were not found during the title search.
- Lender’s policy: Your lender requires this to protect their investment, costing roughly $500 to $1,000.
- Owner’s policy: This protects you, the buyer. In the State of Georgia, it is common practice for the Georgia seller to pay for the owner’s title insurance, but it is negotiable.
- If you pay for it, expect $1,000 to $2,000. This one-time fee lasts as long as you own the property. The cost of title insurance in Georgia typically ranges from 0.5% to 1% of your home’s purchase price.
Inspection and Insurance Costs
These costs relate to the physical condition and future protection of your new home.
- Home inspection fees: A thorough home inspection is crucial. Expect $300 to $500 for a general inspection, with additional costs for items like radon testing or a termite inspection.
- Private mortgage insurance (PMI): Required if your down payment is less than 20% of the home’s price. PMI costs 0.5% to 1.5% of the loan amount annually.
- Homeowner’s Insurance: Your first year’s premium is paid at closing. Expect $800 to $2,000 or more annually, depending on your location and coverage.
Prepaid and Escrow Items
These are funds collected upfront to cover future expenses related to your home.
- Prorated property taxes: You reimburse the seller for any property taxes they’ve already paid beyond the closing date. The amount depends on the closing date and local property taxes.
- Escrow account deposits: Your lender may require an initial deposit to the escrow account to cover future property taxes and insurance payments. This can be 3 to 6 months of premiums and taxes upfront.
- Prepaid Interest: You pay interest from your closing date through the end of that month. Closing near the end of the month reduces this initial payment.
| Fee Category | Description | Estimated Cost |
|---|---|---|
| Loan Origination Fee | One-time fee for setting up the mortgage loan | 0.5%–1% of loan amount |
| Discount Points | Optional fee to lower interest rate | 1% of loan amount per point |
| Appraisal Fee | Independent verification of home value | $400–$600 |
| Credit Report Fee | Checking buyer’s financial history | $25–$50 |
| Document Preparation Fee | Generating loan paperwork | $100–$300 |
| Attorney Fees | Reviewing contract, title search, and closing oversight | $500–$1,500 |
| Title Search | Examining public records for liens or claims | $150–$300 |
| Lender’s Title Insurance | Protects lender against title issues | $500–$1,000 |
| Owner’s Title Insurance | Protects buyer, typically paid by seller (negotiable) | $1,000–$2,000 |
| Home Inspection | General inspection of home condition | $300–$500 |
| Private Mortgage Insurance | Required if down payment is less than 20% | 0.5%–1.5% of loan annually |
| Homeowner’s Insurance | First year’s premium, paid at closing | $800–$2,000+ |
| Prorated Property Taxes | Reimbursement for seller’s prepaid taxes | Varies by date and taxes |
| Escrow Deposits | Initial deposit for future taxes and insurance | 3–6 months of payments |
| Prepaid Interest | Interest from closing date to end of month | Varies by closing date |
Note: Costs are estimates and may vary based on loan type, home price, and location. Always consult your lender and attorney for precise figures.
The Seller’s Comprehensive List of Georgia Closing Costs
For home sellers, the largest expense is real estate commissions. These costs are deducted from your home sale proceeds.
Real Estate Commissions (The Major Cost)
Real estate commissions dwarf all other seller expenses, coming directly out of your proceeds.
- Real estate agent commissions: Typically 5% to 6% of the property’s sale price, split between the listing agent and the buyer’s agent. On a $300,000 sale, this is $15,000 to $18,000.
- Realtor commission payout is deducted at closing, reducing the net amount you receive.
Taxes and Legal Obligations
The government and your mortgage lender have their own charges.
- Real estate transfer tax: The State of Georgia charges $1 per $1,000 of the sale price. This transfer taxes amount is typically the seller’s responsibility.
- Recording fees: The local government charges $50 to $150 to record the new deed in public records.
- Mortgage payoff: You pay off your existing mortgage loan balance at closing. This comes from your sale proceeds.
- Owner’s title insurance: Typically, the seller covers the cost of the buyer’s owner’s title insurance policy, as noted earlier, with fees generally ranging from $1,000 to $2,000, depending on the property’s value..
- Attorney fees: Seller closing costs include attorney fees of typically $500 to $1,000 for preparing the deed and facilitating your side of the closing process.
Negotiated and Additional Costs
These expenses depend on your contract and specific situation.
- Prorated property taxes and HOA dues: Sellers owe buyers for any unpaid taxes through the closing date. Likewise, you settle up on HOA dues.
- Seller concessions: Contributions the seller agrees to make toward the buyer’s typical closing costs. In a buyer’s market, you might offer 2% to 3% to close the deal. This is an additional costs taken from your proceeds.
- Additional fees might include HOA transfer and document preparation fees, outstanding utility bills, or the cost of a homeowner’s warranty.
| Fee Category | Description | Estimated Cost |
|---|---|---|
| Real Estate Commissions | Split between listing and buyer’s agents | 5%–6% of sale price |
| Real Estate Transfer Tax | State charge for property transfer | $1 per $1,000 of sale price |
| Recording Fees | Recording the new deed in public records | $50–$150 |
| Mortgage Payoff | Paying off existing mortgage balance | Varies by loan balance |
| Owner’s Title Insurance | Typically paid by seller for buyer’s policy (negotiable) | $1,000–$2,000 |
| Attorney Fees | Preparing deed and facilitating seller’s closing process | $500–$1,000 |
| Prorated Property Taxes | Unpaid taxes owed through closing date | Varies by date and taxes |
| HOA Dues (if applicable) | Settling unpaid homeowner association dues | Varies by HOA |
| Seller Concessions | Contributions toward buyer’s closing costs (market-dependent) | 2%–3% of sale price |
| Additional Fees | HOA transfer, document prep, utility bills, or homeowner’s warranty | Varies |
Note: Costs are estimates and may vary based on sale price, contract terms, and location. Consult your attorney for precise figures.
Strategies for Negotiating and Reducing Closing Costs
You can often reduce your average costs by knowing when and how to negotiate.
Negotiation Tactics for Buyers and Sellers
- For Home Buyers:
- In a buyer’s market, request seller concessions to cover part of your closing costs.
- A cash offer eliminates many lender fees and the appraisal fees.
- First-time homebuyers should research buyer incentives and grant programs, such as the Georgia Dream Homeownership Program.
- Negotiate with your mortgage lender for reduced loan origination fees.
- For Home Sellers:
- Negotiate the real estate agent commissions with your listing agent upfront. While a 6% commission is common, there’s flexibility.
- Be careful not to cut commissions too aggressively, as this can affect your agent’s motivation and marketing efforts.
Shopping Around for Third-Party Services
Many various fees are not fixed and allow for price shopping.
- Title insurance: If you are paying for the owner’s title insurance policy, get quotes from multiple title company providers.
- Home inspection: Interview several inspectors and compare their inspection fees, credentials, and scope of service.
- Attorney fees: In Georgia, you have the right to choose your real estate attorney. Call a few local firms and compare their services and closing fees.
Understanding Your Disclosures
Federal law provides two critical documents to help you understand your costs.
- Loan Estimate (LE): This itemizes your estimated closing costs and loan terms and arrives within three business days of your application.
- Closing Disclosure (CD): This is your final statement, arriving at least three business days before closing.
- Compare the LE and CD detailed breakdown line by line. Question any significant, unexplained increases in lender fees. Last year, we caught a $1,200 error on a CD where a charge was duplicated, which saved the client significant money.
Finalizing Your Georgia Real Estate Transaction
The Bottom Line: Total Cost to Budget
With Georgia closing costs explained in this guide, preparation is the best way to avoid shock at the closing table. Use these guidelines to budget effectively.
- Home Buyers: Budget 2% to 5% of the home’s purchase price for Georgia closing costs.
- Home Sellers: Plan for 6% to 10% of the home’s sale price in total seller closing costs. By having Georgia closing costs explained thoroughly, you can approach your transaction with confidence and clarity.
Expert Advice for Your Next Steps
Georgia closing costs explained here highlight that every real estate transaction is unique, and your specific costs depend on your loan type, location, and timing.
- Consult with a local real estate attorney in the State of Georgia early on. They can provide a personalized estimate based on the local market.
- Request a detailed breakdown from your attorney and mortgage lender.
- Be a prepared client; this ensures you are a confident client, ready to move forward without last-minute financial stress.
Understanding Georgia closing costs is part of making smart financial decisions in the real estate market. Take the time to learn and plan ahead.
