So, what other money do you need on hand prior to closing? Although you pay the down payment at closing, you will need to show a seller that your offer is in earnest by offering an earnest money check at the time the offer is made. In Georgia, the typical earnest money offered is one percent of the purchase price. That money is held by your agent’s Broker, and then is credited to you at closing. If you terminate within the due diligence period (the subject of another blog post!) you get your earnest money refunded. If you do not terminate within that period, and fail to close, the earnest money is at stake, and could be claimed by the Seller.
The other costs involved in purchasing a home are the INSPECTION, which varies according to how big the property is and how high the purchase price, but which cost $350 and up. Some buyers choose to also test for RADON – which will run $150 and up. Radon is an odorless gas that is emitted from the ground and which has been shown to be a factor in some illnesses, such as cancer. In my experience, most radon tests in Georgia come up negative for radon, although there appear to be pocket areas where radon IS found – around and near Chastain Park, and on the east end of town (towards Stone Mountain). If the radon is found to be above EPA recommended levels, then it should be remediated – and the Buyer will usually ask the SELLER to pay for that.
Your lender may require you pay for the credit check, appraisal, that sort of thing prior to closing to be sure you are actually going to close with them. I’d budget $500-$1,000 for that. If you pay for those prior to closing, but they will reduce your closing costs AT closing.
SO, this gets us to the final costs – closing costs. One lender gave me the formula 1.7 percent of the loan amount plus $1700 in fixed costs. That’s a VERY rough estimate of what your closing costs will be. Obviously, the closing costs will vary depending on many factors. You *can* (and many buyers do) ask the Seller to pay all or a portion of your closing costs. The loan you have will determine HOW MUCH of your closing costs the Seller can pay – they will often be limited to three percent of the loan amount, and you’ll need to pay the rest.
I hope this helps!!! If you need more specific guidance, please do not hesitate to contact me and let me know how I can help you!!!