It's house-hunting season in the Charleston area, where the top months for home showings are February through April, so it's a good time to share more homebuying financial tips.
In last week's column I wrote about mortgage credit certificates, which can save South Carolina homebuyers $2,000 each year they own a home. Fewer than 150 of the more than 91,000 home purchasers in the state got one last year, so I'll try to keep spreading the word.
Now, let me explain two programs offered by SC Housing, the state's Housing Finance and Development Authority, that offer home loans with attractive interest rates, down-payment assistance and down-payment requirements as low as 3 percent.
Down payments are a big challenge, particularly for first-time buyers. A large deposit reduces risk for the buyer and the lender, in case prices fall in the future, and a 20 percent down payment means not having to pay for private mortgage insurance.
However, the prospect of saving up $43,000 or so — that's 20 percent of the $215,000 median price of homes sold in South Carolina last year — is daunting to say the least.
A 3 percent down payment on a $215,000 home would be $6,450, a much more achievable amount to save.
The SC Housing Homebuyer Program and SC Housing's Palmetto Home Advantage Program offer low down-payment options, and buyers are taking notice.
Last year, loans through the Homebuyer Program were up nearly 50 percent, helping 1,350 buyers. The purchasers had an average income of $48,890 and the homes they bought cost, on average, $133,308.
The Homebuyer Program is meant for first-time buyers, and offers down-payment assistance, low down-payment requirements and low-interest fixed-rate mortgages.
In some counties, including Berkeley and Dorchester, a "first-time buyer" simply means anyone who doesn't own a home at the time they purchase one, even if they've owned one previously. In others, such as Charleston, anyone who hasn't owned a home in three years counts as a first-time buyer.
First-time buyers must complete a homebuyer training course (participating mortgage lenders can help arrange that), and there are income and home-price limits that vary by county. The maximum home price in most counties is $300,000.
The payoff is that Homebuyer Program participants can get $6,000 in down-payment assistance that they don't have to repay if they occupy the home for 10 years, or 20 years for those with higher incomes. Those who sell earlier must repay the assistance, but it's a zero-interest loan.
Participants must have a credit score of at least 640 for a conventional loan with 3 percent down.
Palmetto Home Advantage is a newer, smaller program with no first-time-buyer requirements and no home-price limits. It can be used by people moving from one home to another, or residents going from renting to owning, but it's only available to those earning 80 percent or less of the median income for their area.
In the greater Charleston area, for example, that's a maximum household income of $62,320.
Those who qualify can get down-payment assistance in the form of a zero-interest loan that's forgiven after 10 years, and a down-payment requirement of just 3 percent of the mortgage loan amount.
Buying a home can be complicated and confusing, particularly for first-time buyers, but taking the time to learn about financing options can prove to be a big money-saver.