After several years of stagnant prices, the housing market in Georgia may be ready to take off in 2016. An exceedingly high rate of underwater mortgages and a stubborn inventory of distressed homes has kept a lid on housing sales since the housing bubble, relegating Georgia to the bottom 10 states that trail the nation in the housing recovery. Only Atlanta and its surrounding area have shown signs of increased activity and prices. Pent-up demand by new homebuyers is pushing housing prices higher, which should unleash more selling activity as sellers gain back their equity. Homebuyers should be prepared for a seller's market, which means they should be extra attentive when it comes to closing costs. These costs can add several thousands of dollars to the cost of a home purchase, so it pays to shop around and compare lenders.

Average Closing Costs in Georgia

Lenders in Georgia were asked to provide closing cost data, from which averages were calculated. Based on a $200,000 loan value with a 20% down payment, homebuyers spend an average of $1,058 for lender fees and $821 on third-party fees, for total average closing costs of $1,897. These figures are above the national average of $1,847.

Not all lenders charge for all closing costs in the same way. However, the more common closing costs average $1,106 for loan origination fees, $665 for legal fees, $493 for a survey, $411 for a property appraisal, $125 for inspections, $100 for postage and courier services and $76 for tax services. Title insurance fees, which can add more than $1,000 to closing costs, are calculated separately for each home sale.

What Goes Into Closing Costs in Georgia?

Lender practices vary as to what closing costs are included and how they charge for them. However, in Georgia there are several types of closing costs that are common to all home purchases.

All lenders charge loan origination fees, which cover the costs of originating, underwriting, processing and funding the loan. The fee is calculated as a percentage of the loan value and charged as origination points. One point is equal to 1% of the loan value. Discount points can be applied to closing costs as a way to reduce the interest rate.

Next to the loan origination fee, the cost of a title search and title insurance is the biggest out-of-pocket expense. A title search is required to verify the ownership of the seller and to uncover any outstanding liens or encumbrances on the property. The buyer is required to purchase title insurance on the lender to protect it from the possibility of any claims emerging after the close of escrow.

All lenders require a home appraisal to determine if the property is worth at least the sale price. Lenders also want to ensure that the sale price is in line with comparable home sales in the area.

At settlement, all of the legal documents have to be prepared, reviewed and filed. The lender or a legal representative of the title company typically hires an attorney to perform these tasks. Homeowners who want to hire their own attorneys may do so at their own additional expense.

Depending on the amount of the loan and the down payment, lenders may require a buyer to set up a property tax impound account, which includes a tax service fee, to help ensure that taxes are paid on time.

Not all properties require an inspection. However, lenders may order a pest inspection for properties located in certain areas. Homebuyers are advised to have a general home inspection, which they pay for in the closing costs.

Kentucky (KY): Average Closing Costs

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