How to Buy a House in Georgia: A Homebuyer’s Guide

Working with a real estate agent will make it more likely that you’ll find the ideal property for your budget and lifestyle preferences. The agent will not only allow you to sample various offers on the local home market but will also offer you expert homebuying information and guide you through the entire process.

Remember, not all real estate agents are created equal. It’s important to find one that’s trustworthy, reliable and knowledgeable about market conditions.

MoneyGeek recommends using the following tips to find the best real estate agent for you:

• Ask trusted friends or family for referrals
• Verify your agent’s license and experience
• Read reviews from previous homebuyers
• Select an agent that is highly knowledgeable about the local market
• Compare rates with others to ensure they’re reasonable

The cost of living varies considerably in Georgia based on where you live. For example, according to our research, the average cost of living in Savannah is 9% less than Atlanta. Typically, you should select a place whose cost of living does not exceed your income level.

Some items that contribute to the cost of living in a locality include:

• Transportation
• Healthcare
• Utilities
• Education
• Food
• Entertainment

You can easily compare costs in different areas using MoneyGeek’s cost of living calculator.

Georgia has a lower average home value compared to other places in the United States. Homebuyers looking for affordable property may consider comparing costs across the cheapest neighborhoods in the state.

While suburban areas offer more affordable housing options than cities, you may encounter tradeoffs, like reduced access to social amenities or health services. That’s why buyers need to weigh property costs against their lifestyle preferences when choosing where to purchase their home.

Historically, Fitzgerald, Danville and Americus offer some of the most affordable housing options in Georgia. However, they may not have the amenities you’re looking for in your home city.

Aside from your credit score and income, your mortgage rate also depends on the type of loan you select. Mostly, conventional loans attract higher interest than government-backed loans.

On average, you will pay the following average interest rates on a mortgage loan in Georgia:

• Conventional home loans: 5.3–7.0 %
• VA loans: 5.6–5.9%
• USDA loans: 3.25%
• FHA loans: 5.0–5.3%

Mortgage loan interests also change based on the loan term and amount. Eligibility requirements are also unique to each loan type. You can only qualify for a VA loan, for instance, if you are a veteran or active military member.

Calculating your approximate monthly mortgage payment will help you know if you’re able to make consistent premium payments. Our mortgage calculator makes this easy by estimating your monthly payment using factors like interest rate and principal loan amount, among others.

MoneyGeek also allows you to compare rates between conventional and FHA loans to determine which option best suits your profile since you may qualify for both.

Compare mortgage types and lenders for features like APR, loan limits, repayment terms and application costs to find the best mortgage for your needs.

To determine your eligibility for a mortgage, as well as your mortgage terms, lenders evaluate your financial history. Some additional factors that may also determine your loan amount and APR rate include the following:

• Down payment: The more you put down up front for your loan, the lower your monthly mortgage payments will be.
• Credit score: Homebuyers with excellent credit scores receive lower interest rates and higher loan limits than those with bad credit.
• Income: Lenders assess your income level to determine how likely you are to make repayments without defaulting.
• Debt-to-income ratio (DTI): Your debt-to-income ratio indicates the debt you currently have relative to your income. This helps lenders determine whether you can pay your monthly installments comfortably.

Before making any down payments, you need to understand your mortgage type. For instance, if you choose a zero-down-payment loan, such as a USDA or VA loan, you do not need to make any advance payments before your mortgage.

Zero-down-payment mortgages often feature more strict eligibility guidelines. For example, USDA loans are limited to individuals buying homes in eligible rural areas, while VA loans are limited to current and former members of the military.

With other types of loans, like conventional loans, you may also pay as little as 3.5% up to 20%. Your down payment will impact the amount you pay in interest rate and monthly payments; a large down payment typically translates to a lower interest rate and monthly payment amount. Because of this, it’s a significant consideration when applying for a mortgage and purchasing a home.

As you apply for a mortgage, you may also need to consider the insurance requirements associated with the loan. Most lenders ask you to buy private mortgage insurance (PMI) if your down payment is less than 20%, but this will also vary based on your credit score.

For FHA loans, you do not need to purchase PMI, but you may need a mortgage insurance premium (MIP). USDA and VA loans do not require any form of mortgage insurance. You may, however, require a guarantee fee on your USDA loan.

Mortgage insurance aims to protect the lender if a borrower fails to repay their loan. Because of this, you can reduce the amount you’ll pay in mortgage insurance by instilling confidence in the lender that you’re a capable and reliable borrower through a sound financial profile.

If you are a first-time home buyer wondering how to buy a house in Georgia, you should find out whether you qualify for a down payment assistance program. These programs are available to individuals who haven’t owned a house within the past three years and can help cover some of the costs of a down payment.

Some popular down payment assistance programs in Georgia are:

• Georgia Dream Homeownership Program: A service of the Georgia Department of Community Affairs, this program is available in select counties and offers eligible applicants a maximum of $7,500 as a 30-year mortgage. Eligibility depends on your household income and the cost of your preferred home.
• Homestretch Down Payment Assistance Program: Offered by the Gwinnett county government, the homestretch down payment assistance program also provides a maximum of $7,500 in funding in the form of a 5-year, zero-interest loan.

Additional down payment program information for Georgia home buyers is available at the United States Department of Housing and Development.

Before applying for a loan, ensure that you have all the necessary documents and personal information to expedite the process. Lenders may ask for specific details about your credit history, income and existing debt.

Typically, lenders require the following documents and information:

• Social Security number
• Current pay stubs
• Tax returns with W-2s
• Bank statements
• Driver’s license
• Current debt information

Lenders may ask for other supporting documents during the application based on the details you provide for your loan. Ensure you have these documents ready to fast-track your homebuying process.

It may take up to 10 days to get pre-approved for a mortgage by your lender. It is essential to note the expiration date indicated on your pre-approval letter so that you compile the necessary documents within this time frame.

Typically pre-approval letters are valid for 30 to 90 days, so you should only request one if you’re confident you’ll purchase a home during this period. The letter provides details about your mortgage eligibility, including the approved loan amount. If your letter expires before you complete the purchase process, you may need to apply for another one.

After a lender conducts a credit check and establishes that you qualify for a mortgage, you will receive a pre-approval letter indicating that you qualify for a loan based on the lender’s outlined terms. A pre-approval letter confirms to the seller that you can finance the purchase of their property through a mortgage.

It’s possible to obtain pre-approval letters from multiple financial institutions based on your profile. While there is no limit to the number of pre-approvals you may receive, your credit score will be negatively impacted each time you apply since lenders conduct a hard inquiry on your credit information. Generally, each approval is valid for 30 to 90 days.

It’s important to only choose a licensed home inspector. A professional inspector will not only assess a home for repairs and upgrades but will also offer guidance based on the findings of their investigation.

A typical inspection process should include an assessment of the following parts of the home:

• The foundation and basement
• Roof
• Interior and exterior
• Power and electrical systems
• Windows and doors
• Plumbing system
• Chimneys

Georgia’s State Properties Commission has a facility inspection checklist form that home inspectors can use to assess potential homes on behalf of buyers. While sellers may require a standard inspection of your home for mortgage approval, you may also want to complete additional more specialized inspections to ensure the property is free from risks.

Professional home inspectors often prepare a report based on their assessment and may, depending on your agreement, provide expert guidance on the repairs and upgrades required. In Georgia, inspectors do not need to have a license from the state. However, inspection guidelines may also vary at the county level, so you should consult your real estate agent for guidance about the local requirements.

Mortgage lenders conduct appraisals to determine the dollar value of a home before committing to financing it. The process involves the valuation of the property by a licensed appraiser. In some cases, the appraisal value may differ from the seller’s price.

Appraisals also help the lender determine whether you are overborrowing since the home may be repossessed in the future if you aren’t able to repay your mortgage. A standard appraisal takes into account the structure of the home, as well as the market trend for similar properties in the area.

The Georgia Real Estate Commission facilitates the review and management of appraisers in Georgia.

Most of the paperwork for your mortgage is completed at this stage. Some documents that you will need to sign include the final loan application form, property deed, closing disclosure and mortgage fine print, as follows:

• Mortgage note: This document outlines the features of your mortgage loan including the amount and repayment guidelines. It legally binds you to the loan agreement.
• Property deed: The property deed contains details of the property and proves the transfer of ownership from the seller.
• Final loan application: After ensuring that the loan application form has the right information, you can sign it and return it to the lender.
• Closing disclosure: This disclosure provides additional details about your loan and must be returned to the lender within a stipulated duration.

It is recommended that you discuss any unclear loan terms with the lender before signing the documents.

Depending on the lender, loan terms and the location of your future home, you may incur closing expenses ranging from 2% to 5% of its total cost.

Standard costs across lenders in Georgia often include:

• Title search costs: You will incur some charges to conduct a title search to confirm that the property is in the correct name.
• Escrow: An escrow account helps you manage homeowners insurance, mortgage insurance and property tax payments.
• Appraisal costs: While instructions to conduct a home appraisal come from the lender, it is the responsibility of the home buyer to pay for the costs associated with this crucial process.
• Inspection fees: Hiring a professional home inspector also adds expenses to your closing fees.
• Legal fees: If an attorney is involved in transferring the property to your name, you may need to pay their fees.
• Origination fee: This does not apply to all loans, although some lenders will ask you to pay a percentage of your mortgage as origination fees.

Purchasing a home can be tedious if you do not follow the correct procedure. With MoneyGeek’s outlined purchase process, you can easily make informed decisions, from selecting the best place to buy a home in Georgia to closing the deal and ensuring the property is in your name.

After confirming the ideal location of your property, you’ll want to estimate your mortgage rate and down payment amount. You will then conduct an inspection of the home, followed by a property appraisal.

Buying a home is a significant investment of both your time and money. It’s important to be aware that the homebuying process doesn’t stop once you’ve closed your mortgage; to be a successful homeowner, you should make timely payments and manage your budget responsibly.