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First Time Homebuyer’s Guide to Mortgages In South Carolina

Keys to house

Buying your first home can be an intimidating process. You may not be sure where to start, and the information out there can be overwhelming. You may not give much thought to your local bank when it comes to mortgages. You’d be surprised, though, at what your local bank has to offer. For example, here at Arthur State Bank, we offer much more than checking and savings accounts and personal loans. We work with first-time homebuyers in South Carolina, ensuring they get the right mortgage for their financial situation at an affordable rate.

To help you prepare for buying your first home, we’ve prepared this guide. We outline the ins and outs of buying your first home, including what to avoid and what to ask your lender.

First Steps

First Steps

If you’re eager to purchase your first home, you may be tempted to start hitting open houses and meeting with real estate agents. Although it doesn’t hurt to take a preliminary look to get a sense of how much homes cost, a better place to start is with your financial situation. Here are the first steps you should take to get ready to meet with lenders:

  1. Review your credit. You can get a free copy of your credit report once per year at annualcreditreport.com. Check to make sure the information is accurate, and contact the relevant credit bureau if there are any errors. You may also want to find out your credit score, which you can find out through free and paid online services.
  2. Review your financial situation. Take a look at your current spending and decide how much you can realistically afford to spend on monthly mortgage payments. Make sure to account for those unexpected expenses that come with owning a home, such as broken appliances and lawn care. Keep that monthly payment amount in mind when you start reviewing mortgage offers.
  3. Decide on a down payment. Decide how much you can realistically afford as a down payment. Be upfront with potential lenders about how much you can afford to put down. Remember, the larger your down payment is, the lower your monthly payments will be.
  4. Gather your financial information. The Consumer Financial Protection Bureau recommends you have the following information gathered to complete loan applications:
    • Your two most recent pay stubs
    • Your past two years of W-2s
    • Your previous two years of federal tax returns
    • Your two most recent bank statements
    • Documentation of any name changes
    • Documentation of the source of your down payment

Once you completed the steps, you’re ready to start talking to lenders.

What to Avoid When It Comes to Mortgages

What to Avoid When It Comes to Mortgages

When it comes to mortgages, there is no one-size-fits-all solution. Everyone has different needs, and the mortgage that was right for your parents might not be right for you. With that in mind, though, there are some things to avoid when you’re shopping for a mortgage.

  • Opening new credit. Taking out personal loans or getting a credit card may seem like a good way to handle the expenses involved with buying a home. Unfortunately, this could impact your debt-to-income ratio, which is the total amount of debt you have as compared to your income. Applying for new credit also shows up as an inquiry on your credit report, which lowers your credit score.
  • Pushy loan officers. A good loan officer will work with you to connect you with a mortgage that meets your financial needs. They will be happy to give you information in writing and giving you time to think about whether you want to move forward. If you’re feeling pushed to commit to anything, consider taking your business elsewhere.
  • Only getting one quote. It can pay to shop around. While interest rate is important, there are a lot of other variables that impact your ability to be approved for a mortgage as well as the total monthly mortgage and lifetime cost of the loan. Be sure to compare all of the information before you make your decision to apply for a mortgage.

Look for a lender that has worked with other first-time homebuyers in South Carolina. For example, at Arthur State Bank, we’ve worked with thousands of homebuyers of all types over the course of our 86-year history.

What to Ask Your Lender

What to Ask Your Lender

Don’t be afraid to ask your lender any questions that you might have. Some good questions to ask include:

  • What is the requirement for a down payment?
  • What is the interest rate?
  • Is the interest rate fixed or adjustable?
  • If it’s adjustable, how often does it adjust?
  • What is the APR?
  • How long is the loan term?
  • How long is my rate locked in?
  • How much will my closing costs be?
  • What is Private Mortgage Insurance (PMI) and how will it impact my mortgage payment?
  • What is the total monthly payment?
  • How long will it take for me to get a decision on my mortgage loan application?

If you feel comfortable with the prospective lender, complete a loan application. The lender will provide you with the loan estimate. Carefully review your estimate and ask your lender any additional questions you have. Once you’ve reviewed all your loan estimates, choose a lender and get preapproved. Once you’re preapproved, look for a home that fits your budget.

Your Trusted Partner

At Arthur State Bank, we will work closely with you to help you find the right mortgage for your needs. We offer a variety of mortgage products, as well as a mortgage designed specifically for first-time homebuyers. All mortgage decisions are made at the branch level, and loan applications are typically processed within a day so you get a quick response.

Contact us today to get the process started so you can achieve your dream of home ownership.

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AnnualCreditReport.com is the only source for free credit reports authorized by the federal government. Every 12 months, you can get a free copy of your credit report from each agency.

Your credit report has your credit history for all of your credit accounts as well as any credit inquiries and public record court information such as collections. In addition, the report provides personally identifiable information such as your name, address, and employment.

Be sure to carefully review all three reports to identify any problem areas that you may need to clean up prior to applying for a mortgage. If there is any incorrect information, follow the reporting agency’s rules to correct it or add a notation to the report to explain the situation.

Your FICO Score is a score combines data from several areas include payment history, the amount owed, length of credit history, new accounts. Many lenders use this score as a guide. This score is not provided as part of the free annual credit report.

Learn more about how your credit score impacts your ability to secure a loan.

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Couple looking over finances

Primary considerations for setting your housing budget require an assessment of your income, debt and current savings for the down payment on the home. The following are generally recommended guidelines; however, you should meet with an Arthur State Bank lender to get personalized mortgage information.

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Couple meeting with lender

The pre-qualification/pre-approval letter is included with any offer you make on a house to inform the seller that you have met with a mortgage lender and you are prepared to make an offer. The letter states that based on certain assumptions, the bank is prepared to lend you up to a specified amount of money for a home mortgage.

When choosing a loan officer, we recommend going local to work with someone who understands your community’s real estate market. This blog on first-time home purchases includes questions to ask your lender that may be helpful when preparing for your meeting.

Helpful Resources:

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Realtor shaking hands with a client

When a house is sold, the seller typically pays real estate commission to both the listing agent and the selling agent. It is extremely beneficial for the buyer to use their own real estate agent. Loan officers can often recommend selling agents in the area; ask your officer about realtor referrals when discussing your loan.

A good realtor will know the local market and can help you find an ideal home based on your budget, location and desired features. During your search, understand that you will most likely need to compromise on some items, so it’s important to identify your critical needs versus your wants.

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Couple searching online for a home

Additionally, when you start with the house search and work backwards, homes can often go off the market while you’re completing steps 1-4. While browsing homes immediately can be tempting, we recommend following these steps in order so that, once you find your dream home, you’ll be well-positioned to take action immediately.

When you find the home you want and you think you are ready to put an offer on it, you will want to make sure you have all the information you need to make a solid offer.

  • Evaluate the neighborhood.
  • Drive by the house at different times of the day.
  • Examine how other houses in the neighborhood are maintained.
  • Consider any potential traffic or other disruptive noise.
  • Is there ample parking for you and visitors?
  • Read the details in any Homeowner Association agreements (HOA fees and rules).

Make sure to do a preliminary check of house details:

  • Check the water:
  • Does it have good pressure?
  • How long does it take to get the water hot?
  • Is it well water or city water?
  • Turn light switches on and off.
  • Open and close doors and windows to make sure they work properly.
  • Review previous utility bill expenses.
  • Consider the property tax bill.

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Family meeting with realtor at new house

When writing an offer contract, be sure to pay attention to all of the details.

Offer Price:

Your agent should do a market analysis that pulls data on recently sold comparable houses. The best comparisons will come from the same neighborhood.

If you are asking for the seller to pay some of the closing costs, remember that this cost plus the sales commission determines the net amount you are offering the seller for the house.

Work with your agent on your negotiation strategy. There are many things to consider, such as how badly you want this particular house, whether it is a buyer’s or seller’s market and an assessment of the seller’s motivation to get the property sold.

There isn’t one best strategy.

Be sure to document in writing everything you want included with the house, such as appliances, etc. Your agent should guide you through the contract step-by-step.

Contingencies:

  • Home inspection.
  • Mortgage.
  • Final walk through (24 hours prior to closing).

Proposed closing date. Typically, this is 30-45 days from an accepted offer.

A good-faith deposit is required for the offer. This is typically between 1-10% of the purchase price of the house. The deposit is kept in escrow until closing and the money is applied to the purchase price of the house at closing. If the house does not close due to one of the contingency clauses, the buyer receives their money back. However, if the buyer decides not to close on the property, the seller may get the deposit money.

Attach your pre-approval letter to the offer.

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Two people in professional meeting

The clock starts ticking for everything documented in the contract, including mortgage application, inspections and closing date.

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Woman advising other woman on mortgage application

You will need to decide which mortgage to select prior to the application.

Plan for the following potential fees:

  • Application fee (many banks and mortgage companies charge an application fee; however, there is not an application fee at Arthur State Bank).
  • Credit check.
  • Appraisal (may be paid at closing).
  • Loan origination fee (paid at closing).

Once you have approval for your loan, make sure you don’t change anything that will impact the status of your mortgage. Banks do a final check on credit and jobs just prior to closing, so now is not the time to change jobs or make another purchase on credit such as a car or furniture.

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Home inspector going over findings with home owner

Depending on the size of the house, an inspection can cost on average between $300 to $1000.

Many real estate contracts specify how problems uncovered in the inspection will be resolved, up to a certain dollar amount. Should necessary repairs exceed that amount, the buyer has the option to cancel the contract without penalty and receive their deposit money back. Another option is for the buyer and seller to renegotiate who will pay for additional repairs.

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Woman happily holding keys to her new home
  • Homeowner’s insurance is required by the lender prior to closing on the loan.
  • Turn on utilities in your name, effective the closing date.
  • Change your address with the U.S. Postal Service.
    • Make moving arrangements.

Three days prior to closing:

  • You should receive your final Closing Disclosure from the closing agency. The final Closing Disclosure shows a column for the seller and a column for the buyer. All closing charges and credits for both the seller and the buyer are documented in the closing statement.
  • Review the closing statement for accuracy prior to coming to closing.
  • The final amount in the buyer’s column shows you the amount of money you need to pay at closing.

The closing office will provide specific payment instructions. Closing funds have become recent targets for cybercriminals. If you are asked to use a wire transfer, call the office and ask to speak to someone you have been working with to double-check the instructions.

Closing day:

In South Carolina, the closing will usually take place at the attorney’s office. Everyone signing for the mortgage must be present to sign the closing paperwork. Make sure you bring the following:

  • Cashier’s check or proof of payment for wire transfer.
  • Driver’s license.
  • Checkbook, just in case there are any additional items that were not on the closing statement.

Be sure to understand this information:

  • How and when you will pay:
  • Your mortgage.
  • Your property taxes.
  • Your homeowner’s insurance.
  • Any HOA dues.
  • Who to call with any questions.

The best practice is to go through the homebuyer’s roadmap in this sequence. However, if you jumped ahead early in your journey, just circle back to address the steps you missed.

Arthur State Bank’s loan officers are closely tapped into local real estate markets and experts at helping clients get what they need on terms that work for them. We also offer mortgage specials for first-time homebuyers.

To start planning your journey to your dream home, try out our mortgage calculator. If you’re ready to talk to a loan officer, contact Arthur State Bank to request personalized mortgage information today. Don’t forget to ask about our first-time homebuyer offer.

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