CLOSING COSTS

Here is some helpful information about Closing Costs:

Closing costs may vary  from one lender to another and from one loan program and another.  Your lender should present you with a "Good Faith Estimate" of your closing costs.  Depending on the time of the month you close, this should be close to your actual costs at closing.   If you do not understand the costs, it is your right and your responsibility to ask your lender to explain. 

 

  In Georgia, the SELLER is expected to pay for the following : 
      1.  Transfer tax on the deed at a current rate of .0010% of the selling price. 
      2.  Real Estate Commission to Listing Broker (typically split with Selling Broker)
      3.  Any back property taxes, liens, overdue homeowner's association fees, 
           costs to correct any title problems (see Purchase and Sale Agreement for how this 
            is handled). 
These items are not considered closing costs.  An exception would be in the sale of a foreclosed property.
Closing costs may be paid by the Seller or the Buyer.  If the loan is less than 90% Loan to Value, the lender may only allow the Seller to pay up to 3% in closing costs, discount points, and any other cost of closing combined.  FHA loans and 90% LTV (Loan to Value) typically allow a 6% seller contribution.  WHO PAYS THE CLOSING COSTS IS NEGOTIABLE AT THE TIME OF CONTRACT.
 
 
Items Which Are Considered Closing Costs
 
LOAN ORIGINATION FEE .  Mortgage Loan Only.  This is essentially the "commission" charged by your originating mortgage company or bank.  Remember, your originating company probably is not funding the loan, so its fees are collected only one time, at the time of closing.  The average loan origination fee is 1% of the loan amount.
APPRAISAL.  Mortgage Loan Only.  Optional for Cash Sale.  About $350.00
FLOOD CERTIFICATION .  Mortgage Loan Only.  This doesn't mean that your property is in a flood plain - it is required by all title companies.   Average of $90.00.
TITLE SEARCH .  Mortgage Loan Only.  Optional for Cash Sales.  About $150.00.
LENDER'S TITLE INSURANCE .   Mortgage Loan Only. This is a mandatory closing cost.  It protects the lender's interest in the property against any claims against the title.  Cost varies - $200.00 and up.
OWNER'S TITLE INSURANCE.  Mortgage Loan or Cash Sale. This is optional in Georgia.  It protects the Buyer/Owner against any future claims against title.  It is a one-time fee.  Cost varies.  The title company typically issues the lender and owner's policies at the same time, and offers a discount at that time.  Multiply the purchase price by .002, and you'll get an estimate of the cost. 
FINAL PROPERTY SURVEY.  This probably will be optional for Mortgage Loan, and is optional for Cash Sales.  Most title companies no longer require a survey at closing, but the lender may require it (or the buyer may want one).  The cost averages $275.00-$300.00.  You may request that the closing attorney order the survey for closing, or you may order and pay for it prior to closing.
TRANSFER TAX ON THE MORTGAGE.  Mortgage Loan Only.  Cost depends on the mortgage.
ATTORNEY'S FEE.  Mortgage Loan or Cash Sale. This is the fee to the Closing Attorney who represents the lender in the transaction. The average fee in Atlanta is $400-$550.
Depending on your lender, there may be other costs for mortgage broker commissions, underwriting fees, courier fees, etc., that would be considered closing costs.
Please refer to your lender’s Good Faith Estimate for specific costs, and don't hesitate to ask your loan officer for further explanations if necessary.   You'll also want to be sure to bring your Good Faith Estimate to closing with you, to compare it to the Settlement Statement. 
Prepaid Items
Prepaids are not to be confused with Closing Costs.  Closing Costs are costs to close the loan, such as lender and attorney fees and title insurance.  Prepaids are items which are prorated or escrowed at closing.  These may include the following:
PROPERTY TAXES
1. The current year’s tax bill will be prorated at closing.  If the tax bill is not yet out, the attorney will estimate the bill and will prorate the buyer’s and seller’s shares at closing.
2. An escrow account will be set up with your lender to pay your tax bills in the future.  Your lender generally will require enough months in escrow at closing to pay the next tax bill when it comes due.  However, if the tax bill is not yet paid for the calendar year, the buyer will be credited with the seller’s share of the tax bill.  Be sure to get together with your lender prior to closing and clarify how much will be required for escrow.
HAZARD INSURANCE
You must bring a one year paid policy to the closing for your homeowner’s insurance (or have it sent by your insurance company to the closing attorney for the premium to be deducted at closing).  Your lender will require at least two month’s of your insurance premium to be escrowed at closing for next year’s bill.
HOMEOWNER’S ASSOCIATION FEE
If your neighborhood has a homeowner’s association with a mandatory fee, the fee will be prorated at closing, depending on how your HOA collects (monthly, quarterly or annually).  You may also have to pay in full an initiation fee.
PMI – PRIVATE MORTGAGE INSURANCE
If your loan is less than 80% loan to value, your lender may charge PMI, or Private Mortgage Insurance.  You will pay a percentage at closing, and a percentage will be added to your monthly mortgage payment.  Your lender should include an estimate of this cost in your Good Faith Estimate.
The current Georgia Association of Realtors contract allows either the Buyer or the Seller to pay prepaids, but this may dictated by the lender and loan program.
Recommended Optional Items
 
ONE YEAR HOME WARRANTY.   This is not considered a true closing cost, but may be paid at closing by the buyer or seller.  Several third party companies offer home warranties for resale homes.  The cost for basic coverage is under $400.00, and certain optional coverage may be added. 

HOME INSPECTION.  This is not a closing cost, and is optional.  The cost of an independent home inspection is the Buyer's cost.  If you are buying with the right to have the home inspected, it is your responsibility to order the inspection within the deadline period and pay the inspector at the time of inspection.

Estimated Costs of Closing
Below is an example of items which might be included in the Buyer's costs of closing.
The following data is for estimation purposes only and the accuracy of the figures is not guaranteed.  The actual costs with respect to each transaction will vary depending on the circumstances.  You'll find web sites on the Internet where you can calculate your Principal & Interest amount.  This is just one of many:  www.HomeBanc.com
This is a typical 90% Conventional Fixed Rate Loan, and the Seller has agreed to contribute $3,000.00 toward the Buyer's Closing Costs.  There is no required homeowners association fee in this community.  Keep in mind that there are many loan programs available today, including 100% financing. 
 
PurchasePrice    $182,900 
Interest Rate          5.875% 
Loan Period          30Years 
Loan Amount:     $164,600 
Down Payment    $   18,300
 
 
Cash Requirements
Title Insurance (Lender and Owner) $ 493.80  
Loan Origination Fee $ 1646.00 
Appraisal Fee $ 350.00
 
Recording Fees $ 60.00
 
Title Search Fee $ 150.00 
 
Closing Attorney Fee $ 550.00
 
Intangible Tax $ 493.80 
 
Credit Report $ 55.00
 
Courier Fee $ 40.00 
 
Title Insurance Binder Fee $ 75.00 
Flood Certificate $ 25.00  
Warehouse/Underwriting Fee $ 225.00
Total  Estimated Required Closing Costs     $   4163.60 
  
Optional:   Buyer's Home Warranty Plan $ 400.00** 
  Optional:   Survey $ 325.00** 
 
  Optional:   Home Inspection $ 350.00**
Total Estimated Optional Costs                      $  1075.00
Estimated Pre-Paid Expenses 
    Tax Reserve Amount $ 1450.83 
    Homeowner Insurance (14 mo reserve) $ 583.33 
    Pre-Paid Interest $ 52.99 
    PMI Reserve $ 126.82
Total Estimated Pre-Paid Expenses              $   2213.97

Total Closing Costs and Pre-Paid Expenses        $   7451.97 
Down Payment                                                         $ 18300.00 
Less Allowable Closing Costs Paid by Seller      ($  3000.00)
Estimated Total Cash Required                              $ 22677.57
 

Estimated Monthly Cash Required
 
Monthly Payment (P & I) $ 973.67 
Monthly Property Taxes $ 145.08
 
Monthly Insurance $ 41.67
 
Monthly PMI or MIP $ 63.41
 
Monthly HOA Dues $ 0.00
 
Total Estimated Monthly Payment $ 1223.83
** 2 months of PITI cash reserves are required after closing **