As a realtor in Metro Atlanta, my job is to ensure that my clients are well-informed, protected, and advised as to the options available to them. I provide as much information as possible in order to ensure they make an informed decision when purchasing a home, whether as an owner occupant or as an investment. In particular, I try to safeguard 1st time buyers. I want my first-time home buyers to be 100% comfortable with their decision today and in the coming years as well. There are a few minor differences depending on the county dealing with water/plumbing, and a few more important differences between buying a foreclosure and a residential resale or new home construction - but this breakdown will cover the major components
Most new home buyers want to know how much money will be coming out of their pocket during the entire process.
This may vary from state-to-state and even within certain price ranges - due to certain fixed and variable costs involved in the process. But here is an overview of the breakdown for Georgia home buyers:
1) EARNEST MONEY.............Typically 1% of the purchase price - although I try to protect clients on the buyer's side by offering usually $1,000 EM for properties under $200,000 and no more than $2,000 for properties under $350,000. This money is typically applied towards either your down payment or closing costs. It is required to be submited with your initial offer on a home.
2) HOME INSPECTION...................................$350 - $500 - depending on the sales price, square footage, and possible additional tests - like a Radon test - pay out of pocket
3) HOME APPRAISAL........................................$300 - $375 (sometimes can be rolled into the closing costs - so you may not have to pay upfront but it will be a cost incurred)
4) LOAN APPLICATION FEE / CREDIT CHECK..................... Varies by Lender - but most will do it for "free" upfront as they try to earn the business and then it may be rolled into the closing costs & you'll see it on the HUD-1 Settlement Statement
5) TERMITE INSPECTION (optional in many cases, but recommended - & sometimes required by certain lenders)....... $45 - $75
6)*** LOW-FLOW PLUMBING CERTIFICATE (Unincorporate Dekalb County).... $75 - (I typically put the responsibility on the Seller's side by writing a special stipulation in the contract so my buyer clients don't incur this cost
Once the home has been inspected, appraised and approved by the lender, there are costs AT CLOSING.
CLOSING COSTS are really in two fee categories -- Closing Costs and Prepaid Items
1) CLOSING COSTS include the loan origination fee (usually1% of the purchase price), title examination, title insurance, courier fees, transfer tax, intangibles tax and other miscellaneous fees.
2) PREPAID FEES include costs to set up your escrow account with the lender and include hazard insurance (1 year in full up front), property taxes (pro-rated based on the time of year you purchase), and homeowners association dues (if you are in a subdivision or condominium - most neighborhoods won't have HOA's but have Voluntary Neighborhood Associations). Depending on the time of year the lender may require from 3 - 13 months of reserves in the escrow account, just in case you do not pay your mortgage, they will still be able to insure the home and pay the property taxes. It is important to double-check with your lender to see what to expect as that can be a sizable difference in required funds.
Typically, the closing costs and prepaid items add up to 2 - 5% of the purchase price. If you do a government backed loan they tend to be higher and the lower the price point the higher the percentage within this range because certain costs within the process are fixed - while other components are tied to the value of the home sale.
When you negotiate your offer on the home, you can also ask that the seller pay a portion of the closing costs and pre-paid items. The percentages vary as to what banks will allow the seller to pay depending on the type of loan. SELLERS ARE NO LONGER ALLOWED TO GIVE DOWNPAYMENT ASSISTANCE through programs like Nehemiah or Ameridream - but they can pay up to 3% on certain loans - usually conventional, for FHA you can go higher - possibly 6% (but that all needs to be negotiated with the Seller).
****Other things to consider is how much you might need to spend for appliances that may or may not be included in the purchase of the new home (refrigerator, washer/dryer, microwave, stove, & dishwasher). But these vary from house to house & the seller's situation.****
If you have any questions please don't hesitate to give me a call or write me an email and I'll be happy to discuss it further.
Michael Neville - Realtor
Keller Williams Atlanta Midtown
404-310-8364
mike@michaelneville.com
www.MichaelNeville.com
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