Mortgage shopping scares some individuals, and doing it within South Carolina’s very competitive marketplace doesn’t make it any easier. As Palmetto State home costs continue to inflate, being able to secure the absolute best mortgage rate isn’t a want – it’s a must for a bright financial future. The great news? Being one step ahead and doing things correctly means that you’ll be able to secure the best possible terms.
The South Carolina mortgage market has a lot to offer for the shrewd borrower. From a historic Charleston old house to a new home in one of the rejuvenated areas of Greenville, knowing how to make the most out of your mortgage application will save you thousands over the duration of your loan.
Your Credit Score Makes All the Difference
Your credit score is the basis for everything else in the mortgage process. The lender takes this three-digit score and decides if they want to take a chance on you. Small increases in credit score can mean big savings.
If your score falls lower than 620, aim to knock down current debt and fix mistakes on your credit report prior to submitting. Scores between 620 and 679 are high enough for qualification for most loan options, though at higher rates. The optimal range begins at around 740, at which point you’ll be able to obtain the best rates from most loan companies.
Don’t assume that your score is set in stone. Simple solutions like having credit utilization at less than 30% and making each payment on time are able to increase your score within a couple of months.
Strategic Down Payment Planning
Great as the traditional 20% down payment is, that isn’t always a necessity for each situation. The top-rated mortgage lenders in South Carolina offer some programs for first-time homebuyers that incorporate lower down payments with rationale.
Traditional loans take as low as 3% down, though you’ll be charged private mortgage insurance until you get to 20% equity. FHA loans take only 3.5% down and are sometimes a good choice for borrowers with lower credit. VA loans, for qualified veterans and service members, are a zero-down mortgage with rates that are competitively set.
Consider your future finances when making a decision. The larger down payment reduces the payment monthly and eliminates PMI, but ties up money that may be required for moving expenses, repairs, or emergency funds.
The Power of Shopping Around
One mistake that home buyers make most often is settling for the first mortgage that comes to them. The rates between mortgage providers may greatly vary, even for the same loan profile.
You should plan on obtaining at least three quotes from distinct entities: your current bank, a credit union, and one of South Carolina’s higher-rated mortgage originators. Each lender evaluates risk factors somewhat uniquely, and you might be a candidate for better terms with one than another.
Don’t overlook mortgage brokers, who shop around for you at a handful of lenders and frequently find bargains that would elude you. They are especially worthwhile if you have a peculiarly complicated financial situation.
Choosing the Right Loan Category
Fixed rates provide fixed payments for the duration of the loan, and they are best if you’ll probably be living in your home for a long time or want budgetary predictability. Adjustable rates (ARMs) start lower rates that are adjusted at preset times based on marketplace rates.
ARMs are lower-cost if you’ll be transferring or refinancing within the early years. They are higher-risk, though, if rates skyrocket. Government loans like FHA, VA, and USDA Loans are likely to have favorable terms for qualified borrowers compared to conventional mortgages.
Your Mortgage Roadmap to Success
Getting the best mortgage rates means planning ahead, researching, and thinking ahead. Begin by making the best of your credit rating and accumulating a down payment that aligns with your financial objectives. Compare shops aggressively and negotiate with the lender.
Remember that the best rate may not be the best if the fees are high or the terms are unfavorable. Check for the actual cost of the loan and choose a lender who is explanatory at every stage. Being patient and taking the right approach, you’ll be able to secure a mortgage that makes homeownership in South Carolina possible and affordable.
