Atlanta buyers need as much money as possible. Atlanta buyers will need funds for earnest money, property inspection, appraisal, down payment, closing costs and reserves.
Earnest money tells the seller you are serious about buying the Atlanta property. The amount of earnest money ranges from $500 to $2000. For all cash transactions sellers may ask for 10% of the purchase price. The presentation of earnest money is not a legal requirement but a general practice in Atlanta real estate transactions.
Property inspections are scheduled during the due diligence period once the property is under contract. The cost of property inspections average about $300 for the home under 2500 square feet. NOTE: When hiring a property inspector, get references and ask lots of questions. Property inspectors in Georgia are not required to be licensed, but should belong to the Georgia Association of Home Inspectors (GAHI).
Appraisals are performed once the due diligence period is complete, and the Atlanta buyer decides to go forward with the purchase of the property. Appraisals are arranged through the lender for financed transactions. Lenders collect the fee from the buyer upfront. Plan to have about $450 available for the appraisal fee.
Down payment is difference between the purchase price and the loan amount. FHA minimum down payment is 3.5% of the purchase price. Fannie Mae will allow as little as 3% down on Fannie Mae properties. While FHA and Fannie Mae allow minimal amounts, it is better for the Atlanta buyer to apply more towards down payment which causes you to have a lower loan amount and lower monthly payments. A good target for buyers to aim at for down payment funds is 20% of the purchase price. On a $70,000 purchase price, you will put down $14,000 for example, and you may avoid mortgage insurance (aka PMI or MIP).
Closing Costs are the lender fees, prepaids, escrows, and attorney fees. Lender fees include the cost of appraisal, loan origination fees, credit report fees, and other miscellaneous fees. Prepaids include any accrued interest on the new mortgage plus any HOA initiation fees plus any upfront mortgage insurance premium. Escrows include reserves for property taxes and homeowner’s hazard insurance. Attorney fees include fee title search costs, owner’s title insurance, transfer taxes, and other processing fees. We suggest Atlanta buyers budget five percent of the purchase price towards closing costs though the amount may be significantly lower. Lenders will compete for your business and adjust closing costs to match or beat a competitor.
Reserves are the amounts that lenders count as savings that will help a buyer cover the mortgage in the case of an emergency. Reserves can be regular savings, retirement accounts, investment accounts and so forth. Lenders like to see three months or more of reserves.
Discuss this information with your loan officer to have a full picture of what it costs to acquire a home in Atlanta.
For more information on buying a home in Atlanta, please call 404 923 4210 or 404 246 3210. Thank you!
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