Georgia is a thriving state, with beautiful homes and some of the top companies in the country. Homeownership is a goal for many Georgians, whether they're currently renting or thinking about trading one house for another. While the homebuying process can seem daunting initially, there are many resources available as you tackle the process of finding a house and taking out a loan to pay for it. This guide is designed to help you get a mortgage in Georgia.
What Are Georgia's Mortgage Rates?
You probably already know your credit score and annual salary will factor into the rate you're given, but there are many other variables at play in determining interest rates, including the local market and competition among Georgia lenders. Like many other states, Georgia currently has high demand for available homes, making it more likely lenders are seeing regular traffic from interested homebuyers. It can help to understand what factors are considered in setting your mortgage rate so you can position yourself to get the best deal possible.
First-Time Homebuyer in Georgia? Get Assistance
Through the Georgia Department of Community Affairs' Dream Homeownership Program, residents have access to assistance in the form of first-time homebuyer mortgage loans, down payment assistance, and homebuyer education. There are three types of down payment loan options:
- Standard: All eligible homebuyers qualify for $5,000.
- PEN: Eligible homebuyers who are employed in public protection, military, healthcare, or education qualify for $7,500.
- CHOICE: Eligible homebuyers with a household that includes someone with a disability qualifies for $7,500.
To be eligible, homebuyers must not have owned a home in the past three years or must be purchasing a home in a targeted area. Borrowers must meet income and purchase price limits, have limited assets, and must contribute at least $1,000 towards the purchase. They also must attend a homebuyer education workshop or individual counseling. Courses are available in a classroom setting or online.
While the Dream Homeownership Program is geared toward first-time homebuyers, the requirement is waived in certain areas of the state. This encourages homebuyers to choose to purchase homes in areas that have been highlighted by state officials as important for growth. Qualifying areas are highlighted in this brochure.
Financial Assistance Info for First-Time Georgia Homebuyers
First-time homebuyers in Georgia have multiple resources available and this tool can help identify them.
Georgia Housing Counselor Resources
Georgia Affordability and Your Home Purchase
Overall, Georgia's cost of living is lower than the national average and this includes home prices. The median home price in the state is $147,000, up more than seven percent over the past year but still below the national average of $186,100.
Even so, before you begin your home search, you should know how much you can afford to pay each month and find a home with a mortgage to fit that budget. Your loan repayment amount will include insurance and interest, both of which can raise your monthly amount. You'll also need to know how much of a down payment you'll be able to offer and the limit this places on the price of the house you can purchase.
How Georgia Home Prices Might Affect Monthly Payments
|Metro Area||Estimated Monthly Mortgage Payment*||Q3 2019 (Change from Previous Year)||2018 Median Home Price||2017||2016|
|Atlanta-Sandy Springs-Marietta||$874||$238,100 (+6.2%)||$219,900||$198,500||$184,500|
|Chattanooga, TN-GA||$721||$196,500 (+4.6%)||$185,700||$176,100||$164,600|
Source: National Association of Realtors Q3 2019 Metropolitan Median Area Prices and Affordability report.
*Estimated Monthly Mortgage Payment is based on median home prices for the metro area in Q3 2019, a 20 percent down payment and a 30-year fixed mortgage at 3.68 percent. Figure reflects principal and interest only but excludes insurance and property taxes.
Georgia's Borrowing Limits
For 2020, FHA loan limits range from $331,760 for most of the state to $401,350 in the Atlanta area. In many areas of the state, this will be more than enough, although home prices in the Atlanta area are slightly higher than the state average. To purchase a house above these limits, homeowners will need to provide a down payment sufficient to cover any difference. The below table illustrates the FHA and conventional loan limits throughout Georgia.
Experts Weigh In: Buying a Home in Georgia
Jennifer Pino is the assistant vice president and managing broker of the Buckhead office of Atlanta Fine Homes Sotheby's International Realty.
John Chambers is an associate at RE/MAX Advantage Central, where he helps homebuyers in the Birmingham area.
What is the environment for buying a home in Georgia? Has it changed since the economy has improved?
I think that our market is really strong right now. In 2013, we started gaining momentum and it's my perception that we are back up or above the height of the market in 2007. Sellers that purchased eight to 11 years ago that have been hesitating to sell are now able to put their homes on the market and make money on their property again.
Most homes that were purchased pre-recession have come back from being underwater. Market analysis shows us that anyone who bought back in 2005-2007 can now sell their home for purchase price and above.
What is the housing market like in your part of the state?
In Atlanta, we have great inventory on the market, but it usually goes under contract quickly. But a property must be priced right and in good condition in order to move quickly from listing to closing.
The current housing market in Augusta is very comparable to the market before the recession. We're in good shape overall, with our average sales price up about 10 percent year over year. However, inventory is a challenge, with months supply being down during the same time frame.
What do first-time homebuyers need to know about buying a home in Georgia?
My advice to first-time homebuyers is to use a realtor and let them guide you through the process. Oftentimes, first-time homebuyers are shopping at a lower price point and have more competition. They usually don't have the funds for a lot of upgrades after the purchase, so many are looking for a home in turnkey condition, and these properties go quickly. A realtor's expertise can help them to find a home that suits their needs and is a good investment.
My advice is that when you find a property that you like, be prepared to act quickly. Homes are selling fast and receiving multiple offers, so work with your realtor to determine a strategy for acquiring the right property when it comes along.
What Closing Costs Can You Expect in Georgia?
Closing costs in Georgia are in line with the national average, although third-party fees are slightly higher than surrounding states like Tennessee and Alabama. These fees include closing attorney costs and flood certification, as well as surveys and inspections a lender needs before finalizing a loan.
Location can also affect closing costs. Fees can vary dramatically from one city to the next, often in alignment with an area's cost of living. A buyer in a bustling area like Atlanta, Columbus, or Savannah may find third-party fees are much higher than in Warner Robins or Hinesville, which were ranked among the most affordable places to live in Atlanta. Buyers can request sellers pay all closing costs as part of the offer but in a competitive market, this could lead the seller to take another offer.
Average Closing Costs in the Peach State
Source: Bankrate's 2015 survey of closing costs.
Refinancing a Mortgage in Georgia
Many of Georgia's homes have returned to their pre-bubble values, which means they can often sell at a gain. However, the housing supply across the state is still low and in fact, Atlanta has been cited as one of the worst markets in the country for supply. Instead of competing for the few available homes on the market, residents of Georgia's more populated areas often choose to stay in their current homes and refinance.
There are several benefits to refinancing a home in Georgia. A homeowner may decide to merely get a lower payment or shorten the term of the loan, cutting a 30-year loan to one that is paid off in 15 years, for instance. Money saved in monthly payments can then be put toward remodeling that home or paying other bills.
Peggy Burke is vice president and mortgage banker with Atlanta-based PrivatePlus Mortgage. She emphasizes the importance of not letting closing costs keep you from refinancing your home. In exchange for those closing costs, a homeowner can save thousands of dollars over the course of a loan, more than making up for the closing costs linked to a refinancing.
"A lot of buyers focus on closing costs vs. the advantage a refinance will do for their monthly budget," says Burke. "In a refinance, the customer 'skips' one payment. So if an average principal and interest payment is $1000, this is a significant cash flow improvement when they refinance."
According to a study performed by Black Knight Financial Services, Georgia residents save $230 a month on average by refinancing. Since average closing costs in the state are under $1900, these costs can be recouped quickly, especially if a homeowner skips a $1,000 mortgage payment. Prior to refinancing, sit down with a loan officer and determine exactly what your closing costs will be, as well as how long you'll need to remain in the home following your mortgage refinance to make it worth it.
Other Resources for Georgia Buyers
Learn about assistance available to first-time homebuyers and subsequent homebuyers who purchase in qualifying areas.
This organization builds homes throughout Georgia, working with volunteers and low-income homebuyers, who then can purchase the finished home at a low cost using a no-interest loan.
For Atlanta residents who qualify, AAHOP provides up to $10,000 in loan assistance for closing costs or down payments. The loan is forgiven after five years of occupying the home.
Residents in Lawrenceville and other cities in this highly-populated county can apply to this program. Approved first-time homebuyers get a $7,500, zero percent interest loan with a five-year deferral on payment.
Get licensing information on mortgage brokers, lenders, and originators in the state of Georgia, including any administrative actions that have been taken against them.