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Pre-Qualified Loan

GET PRE-QUALIFIED FOR A HOME LOAN

Whether you are shopping for your first home, or your third, when it comes time to submit an offer, you're going to need a pre-approval letter before a seller will take your offer seriously. The pre-approval process should take place immediately after meeting with your agent so you know How Much Home You Can Afford on your new home and what neighborhoods you should consider. Navigating the waters of Financing A Home In Charleston can be scary. Don't worry, we're here to help!

Mave & Market is connected with the top Mortgage Lenders in Charleston, South Carolina. Fill out the form below and we will put you in touch with a Charleston Home Loan Specialist.

 

 

TYPES OF HOME LOANS

 

THERE ARE 4 COMMON HOME LOANS AVAILABLE

Qualifying for the right home loan is essential for your real estate purchase and future peace of mind. After the real estate crash of 2007, Charleston lenders and national institutions have tightened up their credit limits and risk profile. See below for the most common home loans in Charleston and feel free to contact us with questions about your situation.

 

FHA LOANS

FHA Loans are a common loan for first time home buyers and those looking for the least stringent lending standards. An FHA loan is a mortgage insured loan by the Federal Housing Administration that protects the lender should the borrower default on the loan.

Here is an overview of FHA loan requirements and standards updated 2015:

  • This program is open to all borrowers who meet the minimum eligibility requirements below. It is not limited to first-time buyers, contrary to popular belief.
  • All FHA borrowers are required to make a down payment of at least 3.5% of the sale price or the appraised value (whichever is less).
  • To qualify for the 3.5% down-payment option mentioned above, borrowers must have a credit score of 580 or higher.
  • Borrowers with a credit score between 500 and 579 must put at least 10% down, if they can get approved at all.
  • There are debt requirements as well, but these are a bit more lax when compared to the credit scores above. Generally speaking, a borrower’s total monthly debt load should account for no more than 43% of his or her monthly income.
  • HUD allows borrowers to have higher debt-to-income ratios if the lender can identify and document “significant compensating factors.” Such factors might include a long history of timely mortgage payments, excellent credit, or significant cash reserves. For a complete list of compensating factors for “high-debt” borrowers, refer to HUD Handbook 4155.1, Chapter 4, Section F.
  • Borrowers with credit scores below 620, and total debt-to-income (DTI) ratios above 43%, may encounter additional scrutiny during the application and approval process. Borrowers in this bracket may have to undergo manual underwriting. The underwriter will be looking for compensating factors to make up for the low-score / high-debt situation.
  • Lenders can impose their own guidelines on top of those promulgated by HUD. This is known as an “overlay.” So it’s possible for a borrower to be turned down due to a low credit score (for instance), even though the score meets HUD’s minimum cutoff. There are essentially two sets of requirements — the lender’s, and the government’s.

Note: This is a brief overview of 2015 FHA standards and guidelines. For more information on this subject, refer to FHAhandbook.com or HUD.gov. Additionally, there are exceptions and allowances to many of the requirements mentioned above. Borrowers should not assume they are unqualified based on one or more of these guidelines. The only way to know for sure is to apply for the program.


CONVENTIONAL LOANS

One of the advantages of a conventional loan is that it offers many options for home buyers. There aren't mortgage insurance requirements nor are there strict loan to value ratios, though typically a conventional loan is assumed when you put 20% or more down on the property.

There are two basic categories of conventional loans with many options within them: Conforming Loans and Non-Conforming Loans. Simply put, a conforming loan is a loan where the guidelines of the loan, such as the amount, meet the lending standards or limits. For instance, the conforming loan limit for a single family home in South Carolina is $417,000. This means the lender will loan you up to $417,000 for a one unit home. A two unit home limit is $533,850, three unit is $645,300 and four unit is $801,950. Contrarily, a non-conforming loan is one where the lending standards are not met or exceeded. For instance, one of the most common non-conforming loans is a Jumbo Loan. Jumbo loans typically exceed the above loan amounts and have tougher qualifying criteria.

VA LOANS

A VA Loan is a mortgage where the loan is guaranteed by the U.S. Department of Veteran Affairs. VA Loans are offered to our country's military personnel and qualifying buyers must receive qualification status through a VA approved lender.

For home buyers, this loan is one of the best options on the market. In South Carolina, VA Loans are offered at competitive rates and zero money down (up to $417,000). Furthermore, the VA will often loan p to 103.3% of the value of the home allowing buyers to negate any closing costs and fees.

However, when purchasing a home using a VA loan, we recommend buyers to be aggressive in their offer price as many time the home seller will be picking up some closing costs and repairs the lender asks be completed. Since the lender is loaning the full amount of the property, they tend to have strict standards on the condition of the property resulting in many repairs that need to be made prior to closing.

USDA LOAN

A USDA loan is a government insured loan that allows home buyers to purchase a home in rural areas with zero money down. Often times, all closing costs will be covered in the loan or paid for by the seller. USDA loans are always offered at a fixed interest rate and many times have the best interest rates of all loans.

The most common qualifying criteria for USDA loans include credit history, income, location of property, and owning any other properties. The USDA has a strict criteria and typically doesn't allow borrowers to own any other properties when utilizing this loan. There are many areas of Charleston that currently qualify for USDA loans.