Hurricane Season in Myrtle Beach: How to Be Prepared

This past week I attended a conference where they had an economist who was sharing some statistics on our local market and it’s current status here in Myrtle Beach. One of the slides she shared had an interesting statistic on it that I posted onto Facebook. It stated:

“34% of renters can afford to buy the typical home.”

After posting this onto Facebook, I had numerous comments posted there from friends, some in the industry, but many who were not that all basically said the same thing.

The #1 reason most people are renting instead of owning is because they do not know how much money they need to purchase. It was interesting because many of the comments said people do not understand that you do not need 20% down in order to own a home.

Because of this conversation, I created this video to discuss some of the various financing options that are out there currently to buy a home. Some of the options give you the ability to buy a home for as little as $500.

Financing Options In Myrtle Beach Area

So there are multiple types of programs out there to help you purchase a home. In this post, I’m going to cover the main types that most buyers are using to purchase a home. They are:

• FHA
• VA
• USDA
• Conventional
• Second Home/Investment
• Specialty/Portfolio

FHA Financing

This is probably one of the most typical types of loans that consumers are using to purchase a home in the Myrtle Beach area. In this type of loan, you would need to have a downpayment of 3.5% of the total purchase price in order to purchase a home. There isn’t any restrictions as to what area you have be in to purchase a home via FHA.

However, when purchasing a home with an FHA loan, the property is going to need to meet certain criteria & standards. Typically, you cannot purchase a fixer upper with this type of loan because the appraisers are going to make mention to any types of major repairs that would need to be addressed prior to closing.

I recently had a home that a buyer was purchasing with an FHA loan and the appraiser made mention of exposed wires hanging from the ceiling in the dining room where the previous owners had removed the chandelier and did not cover it up. Because the appraiser made mention, the seller had to buy a plate & wire nuts and cap off where the chandelier used to hang in order for the buyer to get a final sign off on the appraisal and final approval given to purchase the home.

VA Financing

VA Financing is an awesome program in which you can purchase a home for literally no money down. But, in order to qualify for this program, you have to have served in the military. There is a bunch of fine print on whether you qualify for a VA loan, this was a great resource to walk you through all of it.

As I mentioned, if you qualify for a VA loan, you get many breaks from little to no down payment, but you also normally qualify for lower interest rates as well as lower closing costs. VA loans definitely have many great benefits.

USDA Financing

USDA Financing is another low downpayment option that is a great way to own a home for little to no money down. This program though does have some rather specific location requirements for a home to be eligible. They actually have a pretty nice USDA eligibility map where you can type in an address and see quickly if a home is eligible for USDA financing.

Now some of the other stipulations that are applicable to a USDA loan relate to credit scores, and condition of the property. If you do not have a credit score of at least 640 in order to qualify for a USDA loan.

Conventional Financing

This is one of the more typical financing options that are out there which gets used to purchase a home. Since I am a Myrtle Beach REALTOR® which is self employed, this is the type of loan my wife & I used to purchase our current home last year.

This type of loan is flexible on what type of property you can purchase and also on the area in which you were to purchase it in. In a conventional loan, you will need 5% of the purchase price to put down on your home. This means if you were to purchase a $200,000 home, you would need $10,000 as a down payment.

Second Home Financing

In Myrtle Beach, we have a lot of people who purchase a second home here in the area & many times they are confused as to what type of financing they can use to purchase this type of home. Many of the financing programs we discussed above like FHA & USDA financing are programs designed to be used on the purchase of primary residences in which you are going to live permanently.

So when you are thinking of purchasing a second home, you will need to have 10% down to make the purchase. You are actually doing a version of conventional financing in this type of purchase, just a higher amount of downpayment is required here.

Investment Home Financing

Now, if you are thinking of purchasing a home that you plan to rent out most of the time instead of using it as a second home, then you are going to need a different type of financing than the ones listed above. First off, just like with a second home, FHA, USDA, & VA financing options are not available as they are designed for primary residences.

Most of the banks out there are going to require more of an investment into the downpayment on investment types of properties versus a primary residence or second home because they look at these type of properties as a higher risk to the bank. If something happens in your finances, you are more than likely to let go of an investment property faster than your main home you live in. To purchase an investment home, you are more than likely going to need 20-25% of the purchase price for the downpayment.

Specialty/ Portfolio Financing

Sometimes, you are wanting to purchase an awesome condominium in a complex that has a current litigation matter against the original builder where the HOA is suing them for things they were paid to build and never did, or for construction that was done improperly.

There isn’t necessarily something wrong with the property, but because of the litigation, most typical financing options will not be able to be used. In these cases, you will need a specialty/portfolio financing option. Normally, these are offered by smaller local banks that have flexible financing options.

These types of loans typically require 25% for a downpayment. The other thing to note with this type of loan is that they normally are not offered with a 30 year fixed rate. Instead they are usually either a 15 year loan, or something if a flexible rate arm after a few years.

Additional Expenses When Purchasing

In addition to your downpayment for the mortgage, you are going to have a few more expenses that you can expect when purchasing a home. The first is for a home inspection. You aren’t required to get a home inspection done, but I always highly recommend a home inspection be done before purchasing a home. These are typically around $300-$500.

Many of the other expenses you would incur when purchasing a home, you could request the seller to pay for you. With a strong enough offer, you can normally get the seller to agree to cover these expenses.

These closing costs would include attorney fees, appraisals, taxes, loan processing, title search, homeowners insurance, title searches, courier fees, and many other items. The last home I sold with an FHA loan for my buyers we asked for the seller to give 3% of the purchase price to the sellers as a credit and it basically covered all their expenses other than the downpayment, so it is possible to get most of the items covered.

I hope that this post helps explain financing options and how much you will need in order to purchase a home here in Myrtle Beach. It hopefully is nowhere near the amount you originally thought it might be. If you would like more information on buying a home, which lenders you should consider, and what options might fit your situation best, feel free to reach out & contact me. I’d love the opportunity to help you start the journey to home ownership in the Myrtle Beach area.