Everything You Need to Know About Buying a House in Georgia

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Georgia has a lot to offer potential home buyers. It has a low cost of living and a bustling economy. Jobs are plentiful and the music-centric arts scene is on the rise. With an average house selling for $218,555, you’re not likely to find a cheaper place to buy a house. 
Even in an attractive housing market like Georgia, the process of buying a house can be confusing and full of pitfalls.
Luckily, the home and car insurance comparison and super-app Jerry is here to shed some light on buying a house in Georgia. We’ll take you through the steps of buying a home from getting your finances in order, to closing on a house.
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Figure out your finances

Before you begin shopping for a home in Georgia, you should make sure you have a clear and complete understanding of your finances. 
Almost everyone uses a mortgage loan to finance the purchase of a house. This means checking your credit score and calculating your debt-to-income (DTI) ratio. 
You’ll also want to familiarize yourself with the expenses associated with buying a house in Georgia such as your down payment and your closing costs

Check your credit score

First things first, you’ll need to check your credit score. The quality of your credit score will tell you the sort of mortgage loan you might qualify for. Generally, you’ll need a credit score of at least 620 to qualify for a mortgage.
If your credit score is below 620 you may have to hold off on the home-buying process until you can get your credit up. You do have a couple of options for a housing loan even if your credit is below 620, including: 
  • The Federal Housing Administration (FHA) will sometimes offer mortgages to home buyers with lower credit scores
  •  The Georgia Dream Homeownership Program awards grants to first-time home buyers and qualifying individuals. This program offers $5,000 to be used toward your down payment as long as you contribute $1,000 of your own money
  • Habitat for Humanity works to help individuals with very low income secure housing. 

Calculate your debt-to-income (DTI) ratio

Your credit score is not the only number that determines your mortgage eligibility. Another factor is your debt-to-income ratio (DTI). Calculating your DTI is pretty straightforward. First, add up all your monthly expenses (rent, loan payments, car payments, reoccurring charges, etc.), then divide by your gross monthly income (your income before taxes) to get your DTI. Examples of payments that count toward your DTI include:
  • Rent or house payments 
  • Car payments
  • Credit card payments
  • Student loan payments
  • Alimony or child support
Insurers like to see that you have a DTI of 0.36 (36%) or lower. The higher your DTI, the more difficult it will be for you to get approved for a mortgage.

Determine your down payment 

Most of the cost of a house will be covered by your mortgage, but you will still be responsible for paying a portion up front. This is called a down payment. If you’re not able to make a 20% down payment, you may qualify for a Federal Housing Administration (FHA) loan or a Veterans Administration (VA) loan. Here’s the difference:
  • FHA loan: A mortgage insured by the Federal Housing Administration for low- and moderate-income homebuyers (especially first-time homeowners)
  • VA home loan: A mortgage insured by the Veterans Administration for servicemembers, veterans, and eligible surviving spouses  
You can make a down payment as low as 3.5% with an FHA loan if your credit score is passable (usually around 580). You may not need to make a down payment at all if you qualify for a VA loan. VA loans also offer competitively low interest rates and lower closing costs.
Mortgages typically require that you make a down payment of about 20% of the total cost of the house. For example, if you are buying a home that costs $200,000, your mortgage lender will probably require you to pay about $40,000.

Prepare for closing costs and other fees

Unfortunately, the down payment is not the only fee you will be expected to pay before closing on a house. There are a few miscellaneous expenses, collectively referred to as closing costs, which you will also have to pay.
Here are some of the fees commonly included in closing costs:
  • Home inspection fee
  • Home appraisal fee
  • Credit report fee
  • Mortgage origination fee
  • Mortgage insurance
  • Earnest money to be used toward your down payment
  • Property taxes
  • Homeowners insurance
In total, home buyers in Georgia can expect to pay between 0.5% and 5% of the house’s price in closing costs. The average price for a home in Georgia is $281,555 and the average closing cost total is $1,847.

Look for homeowners insurance

One way you can minimize your closing costs is to make sure you are getting a good deal on homeowner’s insurance. The average annual cost for homeowners’ insurance in Georgia is $1,376 which means monthly payments of $114.66.
Not sure where to start? The insurance comparison app Jerry can make this process easy by comparing rates from top providers and sending you quotes straight to your phone in a matter of seconds! 

Get preapproved for a mortgage

It is a good idea to get preapproved for a mortgage before you begin shopping for a house. This will give you more confidence and control while negotiating prices—haggling is a whole lot easier if you don’t have to guess how much money you can spend. 
A lot of realtors won’t even agree to meet with you unless you can offer proof that you have been prequalified for a mortgage.
Here’s how to get preapproved for a mortgage: 
  • Provide the lender with your Social Security number 
  • Create a list of all banking information, employment history, assets, and debts
  • Fill out a mortgage application
The mortgage lender will review your finances to decide if they are willing to offer you a mortgage. If they decided to grant you the preapproval, make sure you get documentation to show to relators.  

How to pick the right mortgage in Georgia

Picking the right mortgage is simpler than you might think. A mortgage is just a loan, after all. Like any loan, a mortgage has a term and a rate. The term is the duration of the mortgage, meaning the total number of payments you will have to make before the mortgage is paid off. The rate is how much each payment will be. These two factors are linked. The longer the term, the lower the rate. The shorter the term, the less you’ll pay each month.
On the surface, a long-term loan might sound more appealing since your payments will be lower. Be careful, though—long-term loans end up being more expensive because you will pay more interest overall. 
You generally want a mortgage with the shortest term mortgage and the highest rate that you can comfortably afford each month. That way you pay less money total, and you get the mortgage paid off sooner.

Look for a house

Now that you have all your financial ducks in a row, it is time to start shopping! This is one of the more enjoyable steps in buying a house. It can be helpful to make a list of things you are looking for in a house and rank them by how important they are to you. Tour a wide range of houses to get a comprehensive view of the market area you are dealing with.

Pick your city or neighborhood 

Georgia is one of the most practical states in which to buy a home because of the low cost of living, cheap real estate, a booming economy, and beautiful natural landscapes.
You’ll need to decide exactly what city you’ll be moving to and determine which neighborhood is the best fit for you. Are you looking to save money on living expenses? If so, consider checking out three of the most affordable cities in Georgia: Riverdale, Toccoa, and Morrow. Or, maybe you’re more interested in a vibrant arts scene. In that case, Atlanta might be a good fit for you. If you’re a fan of beautiful architecture, then look no further than Savannah.
Get to know each city you are considering, and decide whether or not it fits your needs for safety, affordability, and culture.

Buyer’s market vs. seller’s market

It is important to know if the neighborhood you have chosen is a buyer’s market or a seller’s market.
Hopefully, you’ll be shopping in a buyer’s market as this gives you the advantage. A buyer’s market means that there are more homes for sale than people looking for houses. Sellers will have to work hard to make a sale and will therefore be more likely to offer you a good deal.
On the other hand, a seller’s market will give an advantage to the person selling the house. A seller’s market means more people are trying to buy homes in the area than there are homes for sale. Potential buyers will have to compete for available houses.
If you don’t know if you’re in a buyer’s or a seller’s market, take a look at homes that recently sold in the area. If houses are selling for less than their asking price or if houses sit on the market for long periods, you are dealing with a buyer’s market. If houses tend to sell very quickly and for close to their asking price, you might be in a seller’s market.
Every city and neighborhood will be different, but Georgia overall tends to be a pretty balanced market. It’s not a buyer’s or a seller’s market, so it won’t give a significant advantage to either the seller or the buyer.
Key Takeaway Georgia operates in a mixed market, so both buyers and sellers will have a decent chance of finding a good deal. 

Find a real estate agent

You may decide that all the hassle, headache, and paperwork of buying a house is too much to deal with. Don’t worry, people often feel that way. That’s why there are real estate agents
Hiring a real estate agent can be a great way to reduce stress so that you can focus on finding a home you love. If you do hire an agent, make sure you choose someone who is trustworthy and knows the local market well.

Make an offer

So, you have successfully navigated the sea of paperwork and preparation, and now you’ve found the perfect house. If you are certain about your choice, it is time to make an offer.
This is another time when a real estate agent can be indispensable. They will evaluate the market, the asking price, and your finances to calculate the best offer to make.
If your offer is accepted, then you’re good to go! Start packing boxes and picking out paint colors! 

How to save on homeowners insurance

Now that you have secured your dream home in Georgia, you’ll need to make sure it is protected. 
Buying a new home is a huge expense and you are probably now looking for ways to save on your monthly budget. Avoid overpaying on homeowner’s insurance by comparing quotes from multiple insurers, and by bundling your home and auto insurance.
If you decide to bundle your home and auto insurance, Jerry can help you find the perfect coverage. Download the app, enter your information and Jerry will get quotes from 50+ insurance providers in just 45 seconds.
Jerry was wonderful! I used it for my auto and renters policies. I trusted it so much that I signed up my homeowners insurance under Jerry as well. All of the agents are amazingly nice and knowledgeable.” —Mary Y. 

FAQs

The average cost of a home in Georgia is $281,555. To cover a 20% down payment and 3.5% closing costs, it would be good to have $66,165 to bring to the table.
You are going to want to have your credit score up to at least 620 to secure a conventional mortgage.
Which city is best for you will depend on what you’re looking for. The safest city in Georgia is Braselton. The most affordable city is Valdosta with an average rent price of $647.

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