If you're considering buying a home in South Carolina, there are some important things you need to know that could save money, help with a downpayment or secure a favorable mortgage loan.
Lots of research goes into finding a home, particularly for first-time buyers who may be unfamiliar with researching prices, neighborhoods, schools, flood zones and more. As a result, too little time may be spent considering the financial options, which go beyond seeing who offers the lowest interest rate on a mortgage loan.
First, in my opinion no one should buy a home without considering a mortgage credit certificate. This under-utilized option, available to the majority of buyers, results in a federal tax credit worth up to $2,000 annually for every year you own the home.
It's a generous perk, available in South Carolina since 2012. However, during the first five years, just 366 home buyers in the state took advantage of it.
Crucially, a mortgage credit certificate can only be obtained prior to purchasing a home, through a participating mortgage lender. It's only for owner-occupied homes, and there are limits on buyers' income and the home purchase price, but they are generous enough that most would qualify.
In every county, they can be used to buy homes costing up to $275,000 (or $295,000 in Beaufort). A single buyer could earn up to $75,000 and qualify in most counties.
The income limit is higher in some counties — $89,400 for one or two people, in Berkeley County — and lower in some. The income amounts increase with family size.
To get the certificate you need to be a first-time home buyer — but wait — that doesn't mean what it sounds like. In most South Carolina counties, being a first-time buyer simply means that you don't have an ownership interest in a home at the time you close on the sale of the home you're buying.
In the dozen "non-targeted" counties, "first-time-buyer" only means you haven't owned a residence in the prior three years, and that requirement may be waived for veterans, single parents, and the disabled.
The non-targeted counties are: Aiken, Anderson, Charleston, Greenwood, Greenville, Lancaster, Lexington, Oconee, Pickens, Richland, Spartanburg and York.
The rules about first-time buyers are important because they apply to a number of S.C. State Housing Finance and Development Authority programs. Anyone considering buying a home should visit the authority's website — schousing.com — and check out the options, which include:
- The mortgage credit certificates I've detailed, offering savings of up to $2,000 each year of home ownership.
- The Homebuyer Program, offering low downpayments plus downpayment assistance for those with at least a 620 credit score.
- The Palmetto Home Advantage Program, with forgivable downpayment assistance. Forgivable means you don't have to pay it back if you follow the rules.
- The Hardest Hit Fund downpayment assistance program, in parts of Richland, Lexington and Sumter counties, offering $15,000 in forgivable downpayment assistance.
- Palmetto Heroes. This program for those in certain professions, such as teachers and police officers, has closed for 2018 but watch to see if it returns in 2019.
Rules vary among those programs. Some are aimed at first-time buyers while others, such as Palmetto Home Advantage, are also available to trade-up buyers.
Charleston County, with some of the state's highest home prices, is one county where the home-price limits used in the previously mentioned programs can be a challenge. The city of Charleston runs a Homeownership Initiative of its own, which is another way first-time buyers can potentially find a great deal.
A limited number of homes are sold and resold at below-market prices through the city program, but it's challenging to learn if any are available. Visit the city's website to inquire, or call 843-724-7353.
Reach David Slade at 843-937-5552. Follow him on Twitter @DSladeNews.