It’s important to know when you’re buying a home in Georgia, who pays closing costs. I review a recent closing sheet line by line discussing the fees for both the buyer and the seller. This fee sheet is normal and customary, the buyer did not ask for any credits and there were none given from the seller for any repairs.
What fees does the seller pay?
Upon review of the seller net sheet there are typically 6 fees that the seller pays. Typically, the largest fees the seller pays is the commission. There is a payoff and handling fee to get your money. A seller typically pays their portion of property taxes, it is prorated for the time they are in the home. Seller will also pay the HOA transfer fee if required and any outstanding water bills.
What fees does the buyer pay?
A buyer pays more fees related to closing the loan. A buyer pays their portion of the taxes, prorated for the time they are in the property. They pay an administration fee and origination fees to the lender if they charge them. The credit report costs money and they have their own fees to use the attorney. The biggest fees typically for you as the buyer are the impounds. If you are choosing to include your taxes and insurance in your payment you will have Principal, Interest, Taxes and Insurance also known as your P.I.T.I. The lender will require that they collect at least 6 months sometimes a full year in advance of your property taxes.
On this particular home the impounds are almost $6,500 in just property taxes to collect upfront to start the loan. Property taxes for the time you live in the property. You also have to bring in an additional $1200 approximately for Home Owners Insurance. That ends up being a huge chunk of money just to get you started in the process. That is money that is stored in a savings account for you by your mortgage company to pay those items as you need. You should also budget for a tax bill increase as property taxes are going up with values.
The seller pays fewer fees but more money than the buyer. These fees can be negotiated and often are. Buyers can ask for help with closing costs and if a seller wants to sell, he may pay them. You can see that it takes a good amount of money just to get started on paying your property taxes!
Know before you offer….
I urge my clients, both buyers and sellers, to get net sheets. To understand BEFORE they make the offer how much the lender will actually require to bring to the closing table. How much is their actual payment? My lenders typically run property specific net sheets so we can talk about a specific property including the HOA payment. I don’t want anyone to have sticker shock when they get to the closing table. The same goes with closing costs, not all of your “down payment” goes towards the loan. Often times people self calculate incorrectly and don’t realize that part of that money is closing costs.
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