Your Guide to Buying a Home in South Carolina
South Carolina Homebuying and Mortgage Process
Overview of the Purchase Process in South Carolina
- In South Carolina, the law states that all real estate transactions must be completed by an attorney.
- The process uses a “settlement agent” to prepare documents and complete the purchase.
- This agent is usually an attorney, although representatives from a title company can be used in certain purchases.
- The buyer and seller usually needs to be present for the final closing.
- Certain inspections are common in South Carolina. These may include termite and special mold inspections.
Step-by-Step Process for Buying a Home in South Carolina
Phase 1: Disclosures and Negotiations
Step Zero: Pre-Qualification and Finding Your Next Home
Before you can launch the purchase process, you need to find a home, make an offer, and have that offer accepted. Before all of that, you need to be pre-qualified. This is an important initial step that will help establish your budget and provide access to homes currently on the market.
- Once you have found a home, you will have to have an offer accepted by the seller.
- At the same time, a deposit will need to be made. This is called “earnest money,” and it’s essentially cash, held in escrow, the demonstrates your serious intention to make the purchase. This is paid to the escrow agent or attorney and never to the seller.
- A signed contract will be sent to the attorney, who will begin preparation of all documents that help transfer and change the title to the new owners. A title commitment will also be prepared at this time.
- The seller will need to submit disclosures. These are statements of flaws and known issues with the home. They will likely include repairs and past improvements. Sellers will often use a document called the residential property condition disclosure statement.
- The buyer will need to review and sign off on these disclosures or adjust their offer as needed.
- The buyer now has the chance to conduct inspections on the home. These must be completed within a certain date (outlined in the contract) and the buyer then has a certain timeframe to report the findings to the seller.
- In South Carolina, a wood infestation inspection is recommended. Because of South Carolina’s environment, a Wood Infestation Report may be required by lenders.
- A lead-based paint inspection may also be requested.
- Once all inspections are completed, the buyer can adjust their offer to purchase or request that any issues are repaired. They may also be able to walk away from the deal without penalty. In turn, the seller has an opportunity to repair the problems or make a counter offer. This process continues until a deal is reached or the buyer decides to pull their offer.
- Once the deal has been reached, the buyer and seller will plan a closing date.
Phase 2: Securing the Mortgage
Most homebuyers in the United States, including the majority of buyers in South Carolina, will use a home loan to make the purchase. The process for securing these loans can seem complicated, and there are many steps, so it’s important that you start early. In fact, Phase 2 can be started at the same time as Phase 1.
- The first step for getting a mortgage is to file an application. This can be done independently, but most will use a loan officer or mortgage broker to complete the application.
- In South Carolina, the lender will send a “good faith estimate” to the buyer. This is an estimate of the total closing costs, and while it’s as accurate as possible, there may be slight differences between this and the final document.
- The lender will need to verify your financial information. Although much of this has been done during pre-qualification, the lender may request a variety of documents, including:
- Financial information: Can include pay stubs, contract information, and other income documents.
- Bank statements: Usually with at least two months of information
- Tax returns: In most cases, lenders will request about two years of tax documents.
- Disclosures that impact your financial situation: These include alimony and child support (that you pay or receive), bankruptcies, legal judgements (for or against), and inheritances.
- Brief explanation of credit inquiries. (Lenders want to know you are not taking out more loans.)
- Information on large cash deposits that are not part of your regular income. (Large gifts and personal loans from friends and family need to be documented.)
- If there is a large cash gift, a “gift letter” will need to be provided. This will outline the size of the gift and verify that it is not a loan and will not need to be repaid.
- Documents that support any of the above information. Lenders want to have all information verified as thoroughly as possible, so they may request documents that verify your income, debt ratio, or other factors.
4. The lender will make an approval decision and, assuming you are approved, create a loan-commitment letter. This will state their willingness to support your home purchase in South Carolina. However, certain conditions will need to be met before final approval, including an appraisal.
5. The bank or lender will request an appraisal on the South Carolina home to verify its market value. If the appraisal comes in low, the buyer can break from the agreement or the bank can pull their offer to fund the purchase. This situation is rare (but not unheard of) and negotiations and other measures are usually used to overcome the low-appraisal issue.
6. Loan contingency will be removed by the buyer. This needs to be done before a certain date so it’s essential that you begin the mortgage process as quickly as possible.
7. Before closing, homeowner’s insurance will need to be ordered. In South Carolina, additional insurance may be required. Depending on the location of your home, this can include flood insurance and hurricane insurance.
Phase 3: Closing the Deal
In South Carolina, the closing meeting will take place at one table with the buyer and seller present at the same time. The buyers will sign all documents related to the loan and the purchase and take possession of the keys to the property. The deed will also be recorded and the buyer can move into their new home. However, there are a few steps to complete before finalizing the purchase.
- Before the final settlement meeting, the attorney or title company will perform a title search. This will determine whether or not liens exist on the property and if there are any ownership disputes.
- All paperwork for changing the title will be completed and title insurance may be prepared.
- A final walkthrough will be done before the meeting. This is to check that the property has not been damaged since last viewing.
- When the closing begins, the buyer and seller will sign all related documents.
- The buyer will make the final payment to the attorney overseeing the process.
- The attorney or representative will record the transaction with the city or county.
- You’ll receive the keys and move into your new home!
Lending Limits in South Carolina
Loan limits for the entire country are set by the Federal Housing Finance Agency. However, the limits change on a county-by-county basis. Counties with high property prices have larger loan limits to ensure buyers in that area can make the purchase.
In South Carolina, however, the entire state falls within the base limits. From Oconee County in the far northwest corner, down to the Atlantic coast from Jasper up to Horry counties, the limit for single-family homes is $548,250.
Many government offices support the purchase of multi-unit properties. These properties also have conforming loan limits. For a duplex, the limit is $702,000, while a three-unit property in the state of South Carolina has a loan limit of $848,500. Four-unit properties (which are the most you can buy with a conforming loan) has loan limits of $1,054,500.
If you need financing above these limits, there are options available, including jumbo loans for South Carolina properties.
Note: This article is for general information only and should not be taken as legal, financial, or real estate advice. Always speak with a qualified professional before making any decision.