Purchasing a home in South Carolina for the first time can be both exhilarating and stressful. To alleviate stress, it’s best to work alongside an experienced real estate team, who can streamline the process and help you get the best possible deal on your investment. A first-time home buyer may feel overwhelmed by the amount of paperwork, information, tax codes and state laws involved in a transaction. A primary issue that can cause delays or impede a sale is mortgage loans.
Many first-time home buyers encounter challenges when it comes to mortgage approval. If you’re entering the real estate market to buy a South Carolina home for the first time, it pays to learn as much as you can (ahead of time) about the mortgage system, including types of mortgage loans, as well as loan duration options.
Types of mortgage loans for first-time home buyers
Every first-time home buyer wants the process to be as cost effective as possible. Making wise decisions regarding which type of mortgage loan to apply for can help you achieve your goals. Some buyers may have several loan options, including those shown in the following list:
- Conventional loan
- VA loan
- FHA loan
- USDA loan
If you or your spouse are currently or have served in the U.S. military, you’ll want to explore VA loan options, which often enable servicemembers and veterans to make a first-time home purchase with no down payment. The first type of mortgage loan listed is unique because it’s the only option on the list that is not guaranteed by the U.S. Government.
Basic review of the listed loan options
If you’re not familiar with one or more of the types of mortgages shown the previous section, this brief overview may be helpful:
- A conventional loan is not government-supported and may be conforming or non-conforming. You must meet credit score requirements to qualify for a conforming mortgage loan; those with poor credit scores are often able to gain mortgage loan approval through the non-conforming method.
- A VA mortgage loan is a loan that is guaranteed by the U.S. Department of Veterans Affairs; however, not all lenders participate in the VA loan program. Benefits typically include purchase ability with no down payment. The downsides may include higher interest rates, as well as funding fees.
- An FHA loan is backed by the Federal Housing Administration. Only government-approved lenders may offer this type of mortgage loan. This option is usually offered to low-income buyers or those with poor credit scores.
- A USDA loan is a mortgage option offered by the United States Department of Agriculture. It is designed to help low-income, rural home buyers who do not qualify for conventional loans.
Should you go for a 15-year or 30-year mortgage?
If you were to take a survey of South Carolina first-time home buyers, you’d likely discover most buyers opting for a 30-year mortgage loan. However, if you can handle a higher monthly payment and do not plan to sell your house anytime soon, a 15-year mortgage might be a better fit for you.
Keep these things in mind when discerning which mortgage option is best: You’ll be mortgage free a lot sooner with a 15-year option and will pay more for your house over the long run on a 30-year mortgage. Discussing mortgage loan options with an experienced real estate agent and financial advisor will help you attain the best deal possible.