Buying a home in Charleston, SC?
Buying a home may not always be the easiest process, but Properties Plus agents make it as smooth a process as possible.
An experienced Properties Plus agent can help you to find the right home, determine how much home you can afford and handle the contract for you. Moreover, our agents guide you through every step of the way throughout the process.
Just check out these buyer tips by clicking on a question:
1. Finding a Down Payment.
Unless you're independently wealthy or have just won the lottery, you will need to get financing. Other than VA loans, which are only available to veterans, let buyers get away without putting anything down. The two most popular types of mortgages are FHA loans and conventional loans, which require minimum down payments ranging from 3.5% to 10% of the sales price.
2. Obtaining a Minimum FICO Score
The two magical numbers are 620 for FHA and 720 for conventional loans with mortgage insurance. If your FICO score falls below that number, you may not qualify for those mortgages. For conventional loans without mortgage insurance, your FICO can dip as low as 620, but the interest rate increases. To find out your FICO score, you should ask your lender to run your credit report or obtain a FICO score online. You will receive scores from 3 credit reporting agencies and take the middle FICO score to compare.
3. Meeting Lender Ratios
Most lenders expect a buyer to have a maximum 33% front-end ratio. This means your mortgage payment, plus taxes and insurance (PITI), cannot exceed 33% of your monthly gross income. For example, if you earn $5,000 a month, the maximum payment for which you may qualify is $1,650. The back-end ratio is trickier. This involves adding together your payment with all monthly revolving debt payments. That percentage of your gross monthly income should fall between 41% and 50%, depending on the type of loan and lender. With mortgage insurance, your highest back-end ratio cannot exceed 41%, which means to qualify for a higher back-end ratio, you may need to put down at least 20%.
4. Receiving an Appraisal at Value
The Home Valuation Code of Conduct, HVCC, became effective May 1, 2009, and applies to all conventional transactions. Since January 1, 2010, it now applies to FHA transactions as well. It's a well meaning process that is flawed. In the past, a lender could select its own appraiser. That appraiser was generally experienced, knew the neighborhood and had appraised many homes in specific areas, which typically would result in a fair and balanced appraisal. Now, appraisal management companies pluck an appraiser at random from a pool of appraisers. Your appraiser could be from another area or unfamiliar with the neighborhood, which often results in a low appraisal. If the appraisal does not come in at value, and if the seller refuses to adjust the price, buyers with an appraisal contingency can either walk away from the transaction or pay the difference in cash.
5. Satisfying Loan Conditions
Underwriting can be frightening. An underwriter reviews the file and can make demands. These demands can include more documentation, a review appraisal and, even then, the underwriter could reject the loan for a variety of reasons. If you have remarried, for example, and your former spouse had owned a home that went through foreclosure or a short sale, if your name was still on the mortgage, you could be disqualified from buying a home with your new spouse. The way to increase the odds of underwriting approval is to disclose everything about yourself and your financials to your lender, and make sure the loan officer has been in the business long enough to foresee future problems before you get that far.
