Your Guide to Buying a Home in Georgia
Georgia Buying Guide
- In the state of Georgia, all real estate transactions must be closed by an attorney.
- The attorney will not only complete the purchase, they will prepare all documents leading up to the final closing.
- The buyer and seller will usually meet together at the same closing table.
- Georgia has unique factors, including an increased need for termite inspections. In Georgia, as well as other southeastern states, a termite bond contract may be used to protect your investment.
Phase 1: Negotiations for the Purchase
Once you are in contract, these are the initial tasks you’ll need to complete. These can often be done at the same time as Phase 2, which is the mortgage process.
- The first step is to have an offer accepted by the seller, which will launch a contract phase.
- Shortly after the contract is signed, you’ll need to pay “earnest money,” which is cash held in escrow that demonstrates your serious intention to make the purchase.
- You will now have an opportunity to review and approve any disclosures. Disclosures are simply statements of known problems or flaws with the property, and they can include past repairs, issues that may come up soon, or defects with the land. A disclosure form is usually provided by the seller before the contract is signed.
- As the buyer, you now have an opportunity to complete inspections. You will have a certain number of days to complete these inspections, and this timeframe will be outlined in the “buyer’s right to terminate” clause of the contract. In Georgia, numerous inspections could be completed, but a general house inspection and termite inspection are most common.
- Some Georgia real estate may be covered by a termite bond contract with an extermination company. This protects the property from termite damage on a continual, longterm basis.
- Depending on the outcome of the inspections, you may ask for additional repair work on the Georgia home. You could also request a reduction in closing costs or a change in the sale price. If the termite inspection shows pest problems, a you may also request that the seller fund a termite bond contract. The seller can then accept or deny the request or, more commonly, offer a negotiated change. If needed, you can end the transaction and have your earnest money returned.
- You can also request a home warranty to cover appliance repairs or replacements for a certain period.
Phase 2: Securing the Home Loan
Most homebuyers in Georgia will need a home loan. This is often the most frustrating and detailed phase, so it’s best to start as early as possible. Once you are in contract for a Georgia property, you can begin Phase 1 (negotiations) and Phase 2 (mortgage) at the same time.
- You will begin this phase by submitting a loan application to your lender. You can do this independently, but many will work with a mortgage broker or agent.
- The lender will submit a “Good Faith Estimate.” Submitted within a few days, this document will outline the estimated closing costs for your mortgage financing. The final costs may deviate from this total, although lenders attempt to make it as accurate as possible.
- Although you have already been pre-approved for a loan, and much of this information has been submitted already, you may need to provide a series of documents for final loan approval. More may be requested, but your lender will likely ask for:
- Paystubs and recent financial information, such as contracts if you own a business or employment information.
- At least two years’ worth of tax returns. More may be requested by the lender in unique situations.
- Information on outstanding liens and debts of any kind, including car loans, other mortgages, and consumer debt.
- Bank statements for all accounts that you own.
- Any information that impacts your financial situation, including payments you make or receive. This can include marriage licenses, divorce settlements, child support, legal judgements, alimony, and any other financial contracts.
- Explanation of recent credit inquiries.
- Information on large deposits or cash gifts. Lenders are interested in any payments that are not part of your regular income. If you have received a cash gift to help with your Georgia real estate purchase, the lender will likely request information on the gift, including the relationship between you and the giver, as well as a statement that the money is not a loan and will not need to be repaid.
- Repeated or updated information. Lenders want to verify that there have been no changes to your financial situation. As such, they are interested in verifying that you have not taken out new credit cards or loans, and have not changed jobs. To verify this information, they may request new updates to any documents you have already submitted.
4. Using the above information, the lender will now make a decision on your mortgage loan. Assuming you are approved, they will issue a loan-commitment letter, which officially states their willingness to support your purchase.
5. The financing contingency, which is usually part of your due diligence, can now be removed from the contract.
6. An appraisal will need to be completed before the Georgia purchase is final. Appraisals are almost always a requirement from the lending company, and they help verify that the home has substantial value, which is important to lenders. If the appraisal comes back with a low number, changes to the purchase may be required, including a larger downpayment or a smaller purchase price.
7. Finally, you will need to order homeowners insurance and deliver a copy of your policy to the lender.
Remember, this step is long and extensive, so you should begin collecting documents and working with lenders as soon as possible.
Phase 3: Final Settlement
In the state of Georgia, the final closing will take place at one table, usually with all parties present at the same time. Once all documents are signed, you will take possession of your new Georgia home!
- Before the final settlement date, a title search will be completed. This simply verifies that the home’s title is free and clear, and the seller has a legal and unobstructed right to sell the property.
- Your attorney will now begin preparations for changing the title and transferring the deed. If required, you will file an application for title insurance.
- A final cash figure will be calculated for the closing costs. This is the amount you will need to finalize the closing on your new Georgia property.
- You will want to conduct a final walkthrough of the property. This will ensure there has been no damage or changes to the property since the contract was signed.
- At the closing table, you and the seller will sign all the appropriate documents, including final loan documents.
- You will now pay the remaining funds in your downpayment. This is usually delivered as a cashier’s check.
- The transaction will be recorded with the appropriate municipality, which could be the city or, if in a rural area, the county.
- Finally, you will receive the keys to your Georgia property.
Congratulations! Once this phase is complete, you will be the official owner of a new Georgia home!
Conforming Loan Limits in the State of Georgia
Across the country, the limits for conforming loans are determined by the Federal Housing Finance Agency, which sets limits for each county. The base limit, which is used by most counties, is the max amount you can borrow when using a government-backed loan. But in high-cost areas, this limit can be increased significantly.
All of Georgia, however, is under the base limit. This means for a single-family house, the limit is currently $548,250.
Conforming loans are also available for multiunit properties, but they have limits as well. For a two-unit property, the limit is $702,000. For a three-unit property, the limit is $848,500, and for a four-unit property, the limit is $1,054,500 when using a conforming loan.
Remember, however, that these are the limits for conforming loans only. If you need financing above these amounts, there are jumbo loans in the state of Georgia.