8 Steps to Buying a House in South Carolina

Buying a house in South Carolina is an exciting milestone, but the process can take some time. Several factors, like your financial situation, market conditions, and the local economy can affect both how long it takes you to find a home and how much it costs you.

For example, homes in Columbia are hitting the market at $315,000 and selling within 24 days — 17 days faster than the state average! — so you'll need to move quickly if you want to beat out the competition.

However, homes typically stay on the market longer in Georgetown, so you'll be able to take your time and potentially find a better deal.

The more you know about the steps to buying a house and South Carolina's current real estate trends, the more prepared you'll be to navigate this complicated process as quickly and smoothly as possible.

No matter where you are in your home buying journey, Clever's concierge team can connect you with local real estate pros who will help you purchase your South Carolina dream home!

The best part? When you buy with a Clever real estate agent, you could earn a cash-back refund worth up to 0.5% of the home price. On a qualifying $300,000 purchase, you'd get $1,500. That's real money back in your pocket!

» START: Buy with a top local agent, save thousands with Clever Cash Back

Step 1: Save for a down payment

Your down payment is the initial portion of your home's purchase price that you pay at closing. Your mortgage lender will pay the remaining balance.

Typically, mortgage lenders in South Carolina want you to contribute 20% of the purchase price as a down payment. That would be $57,318 for a $286,590 home — the typical home value in South Carolina.

However, you have options to lower your down payment amount.

Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).

» READ MORE: Everything you need to know about low-income home loans

But making a down payment of less than 20% comes with some risks.

First, because you're borrowing more money, you'll have a higher monthly payment and pay more in interest over the life of your loan.

Second, you may have to purchase mortgage insurance.

Conventional loans require private mortgage insurance (PMI) until your loan balance reaches 80% of the purchase price. FHA loans, on the other hand, require a mortgage insurance premium (MIP) for the life of your loans.

Mortgage insurance costs around 1% of your mortgage balance annually. However, rates vary based on your down payment and credit score. Typically, your mortgage insurance payment is added to your mortgage payment each month.

VA loans don't charge mortgage insurance. Instead, you'll pay a VA loan funding fee at closing, which can range from 1.4% to 3.6% of the purchase price.

South Carolina down payment assistance programs

Are you struggling to save enough for a down payment on a South Carolina home?

There are several down payment assistance (DPA) programs throughout the state that can offer financial aid to first-time and low-income homebuyers. If you're eligible for one of these programs, you could receive a grant or a second mortgage to cover closing costs or a down payment.

Check out these resources and find out if you qualify for assistance:

SC Housing Homebuyer Program

SC Housing's Homebuyer Program offers a forgivable DPA option for eligible borrowers. The financial aid can come as a 0% interest 10-year or 20-year mortgage, depending on the household income.

Eligible participants must occupy the property for the duration of the loan in order to have the mortgage completely forgiven.

SC Housing Palmetto Home Advantage Program

The Palmetto Home Advantage Program also offers forgivable down payment assistance of up to 5% of the loan amount. The financial aid is a forgivable 10-year loan that accrues no interest.

This program is available to first-time and repeat homebuyers who have credit scores of 640 or higher. Home purchase price and household income limits apply and vary by county.

SC Housing County First Initiative

SC Housing's County First Initiative offers forgivable financial assistance of up to $8,500. This program is available to first-time and repeat homebuyers, but certain counties in South Carolina are not eligible.

Household income and home purchase price limits apply and vary by county.

U.S. Department of Housing and Urban Development

You can find additional DPA resources in South Carolina through HUD here.

Step 2: Get pre-approved for a mortgage

A mortgage pre-approval letter is an offer to lend you up to a certain amount of money to purchase a home. It shows sellers that you are a serious buyer who is financially qualified to make an offer on a home.

Most sellers in South Carolina will require pre-approval before showing you their home.

You don't have to decide on one lender right now. In fact, you should compare interest rates and pre-approval amounts from several lenders to make sure you're getting the absolute best terms when you buy your South Carolina home.

To get a pre-approved for a mortgage, you'll fill out a mortgage application and provide details about your financial situation. They'll look at the following information to determine your mortgage pre-approval amount:

Total income

Lenders need to know that you earn enough to make your mortgage payments each month. Most lenders want your monthly housing costs to be less than 28% of your monthly income.

Personal debt

Lenders also consider your other debts, including credit cards, student loans, auto loans, and personal loans. They use this information to calculate your debt to income ratio (DTI) — or your total debt (including future mortgage) divided by your total income.

While some lenders will approve mortgages for buyers with DTI as high as 43%, it's best to keep your DTI under 36%.

Because of this, you might consider paying off some of your other debts before applying for a mortgage in South Carolina.

Cash reserves

Mortgage lenders in South Carolina want to see that you have enough cash in the bank to cover your down payment and closing costs without completely draining your cash reserves.

While this requirement varies by lender, most want you to keep at least enough to cover two mortgage payments including insurance and taxes.

Step 3: Choose the right location

A house's neighborhood can be just as important as its layout and features. In general, you should consider the following factors when deciding which neighborhood is best for you:

What's your home buying budget?

Once you know your budget (a pre-approval letter will tell you the most you can expect to borrow), you can narrow your search to neighborhoods where homes are selling within your price range.

Also, look at past home value trends. This will give you an idea of how much your home's value could go up over the next few years. You want to choose a neighborhood that's in your budget, but could also lead to a big return when you decide to sell.

To give you an idea of how appreciation could impact what your house is worth in the future, consider these examples from three neighborhoods in Columbia:

Home value appreciation in Columbia

Local lifestyle

Once you have a list of neighborhoods with homes in your budget, you should evaluate how well each one meets your personal needs and preferences. To finalize your list of target areas, consider factors like:

• School districts
• Your daily commute
• Crime rates
• Restaurants and amenities
• Transportation options

Step 4: Find a great real estate agent in South Carolina

Your real estate agent will be your main ally during the home buying process. Besides finding and showing you properties, your agent should be an expert on buying a home in South Carolina.

They'll help you make offers, negotiate contracts, and navigate the closing process. Plus, they can recommend other service providers like title companies and inspectors to help you buy your home in South Carolina.

Don't rush into choosing an agent. Instead, take the time to research and interview multiple real estate agents who have experience in the neighborhoods you're interested in. you should pay attention to a realtor's:

• Years of experience
• Number of transactions in the last year (the more the better!)
• Experience in your price range
• Overall review score
• Individual reviews and complaints

Ask each of them questions about your target neighborhoods, how they prefer to communicate, and their strategy for helping you find and close on your new home. You should feel comfortable with the agent's knowledge, experience, and process before committing to an agent.

Step 5: Start house hunting in South Carolina

Searching for homes in South Carolina is the fun part of the home buying process! You'll get to look at a variety of homes and discover what you really want in a home.

Prioritize your needs vs. wants when buying a home in South Carolina

Make a list of everything you want in a home and prioritize them. At the top of the list should be the items that are most important to you. This will help you separate your "must-haves" from your "nice-to-haves."

Your agent can help you understand if your wants are realistic for your budget and favorite neighborhoods or if you need to rethink what you're looking for.

Look at current housing inventory

The timing of your house hunt in South Carolina can have a big impact on your number of options. For example, in South Carolina, May has historically seen the most homes for sale. Searching in this season could give you more options and a greater likelihood of finding your dream home.

On the other hand, November gives you the fewest choices in South Carolina. Historically, there are 21.0%) fewer homes for sale than during South Carolina's peak season.

Housing inventory in South Carolina by season

Step 6: Make an offer

Once you find a South Carolina house you love, it's time to make an offer. Your real estate agent will help you write a compelling offer that gives you the best shot of convincing the homeowner to sell to you.

Currently, in South Carolina, homes stay on the market for 76 days before going under contract. However, every market goes through seasonal changes. During busier months, homes get snatched up more quickly than others.

Historically, South Carolina homes sell fastest in April, where the average property is only on the market for 67. If your home search falls around this time, you should be prepared to move quickly and potentially make offers on several homes before yours is accepted.

On the other hand, if you buy in December, you have a bit more time to search. Homes typically stay on the market 17 days longer than South Carolina's annual average.

Average time homes spend on market in South Carolina

What should your offer include?

Your real estate agent can help you decide which of these common options you should include in your offer:

• Seller concessions: You'll have to pay for most of your closing costs out of pocket when you buy a home, but you may be able to ask the seller to cover some of those costs for you. This option may allow you to offer a higher purchase price and essentially include your closing costs in your mortgage.
• Repair credits: If the home is in need of repair, you could ask for credits instead of having the seller make and pay for the repairs. The seller avoids the hassle of waiting for contractors to complete the job, and you get to oversee the repairs in the future to make sure they meet your expectations.
• Inspection contingencies: Most purchase agreements have inspection contingencies that allow you to change your offer (or back out all together) if the inspection turns up major problems. If you have a high degree of certainty about the house's condition (like if the seller can show you a recent inspection report), you can forgo this contingency to give the seller a higher sense of confidence.
• Letter to the seller: Many sellers have a personal attachment to the home. They've lived there for years and want to know the next owner will take care of the property. Writing a letter to the seller can show them how you picture your life in the house and appeal to their sentimental side.

Step 7: Inspections and appraisals

Inspections and appraisals are an opportunity for you to better evaluate the home's condition and value before officially purchasing it. You may have an opportunity after this step to renegotiate the terms of your contract with the seller if something unexpected pops up.

Home inspections in South Carolina

Having your South Carolina home inspected by a licensed inspector gives you peace of mind about the condition of the property before you commit thousands of dollars to purchase it.

Your inspector should check out the following parts of the property:

• Roof
• Foundation
• Electrical system
• HVAC system
• Plumbing

If the home has a septic system, you should also pay for a septic inspection to make sure it doesn't have any problems that wouldn't be covered in a typical home inspection.

South Carolina-specific inspections

South Carolina law requires sellers to complete disclosure forms to the best of their knowledge, but some property issues may go unnoticed. That's why it's highly recommended for buyers to take extra precautions and have specialized tests completed before closing on a home.

In addition to a general home inspection, here are a few important tests you should consider doing as well:

• Radon testing: The state of South Carolina recommends radon testing for all homes, but it isn't required. If the seller hasn’t done a radon test in the past year, you can request a free radon test kit from the South Carolina Department of Health and Environmental Control here.

• Pest inspection: Certain lenders may require you to get a pest inspection, but you should consider getting one even if you aren't obligated to do so. Termites and other pests can cause serious damage, and early detection is vital to prevent an infestation from getting out of hand.

Appraisals

Appraisals determine the value of the property. If you're using a mortgage to buy your new home, your lender will order an appraisal to make sure the home is worth the money that it's loaning you.

» LEARN: 3 options for buyers after a low appraisal

Step 8: Close on your new home!

Once you finish your inspections and your lender approves your financing, you'll be ready for closing! Closing is the process of finalizing your mortgage and transferring ownership of the property.

Closing on a home in South Carolina is pretty straightforward when you work with a title company. On closing day, you'll meet at the company to complete the paperwork for the title transfer and settle your closing costs.

Prepare to spend about an hour reading and signing legal documents. There will be a lot of information to get through, but each page is required to transfer the title into your name.

Some important forms you'll have to review and complete will include:

• Your final loan application
• The deed
• The mortgage promissory note
• The disclosure statements

After you're done signing the documentation, it'll be time to pay your closing costs. The title company will make this easy for you by collecting the total amount you owe and distributing the funds to the right recipients on your behalf.

Homebuyers can generally split their closing costs into four categories:

• Lender fees: Fees that your mortgage lender charges for preparing your loan. Sometimes, these charges may cover other costs associated with your loan, such as appraisal or survey fees.
• Title and escrow charges: Fees that the title company charges for facilitating the closing process and conducting the title search. Buyers and sellers often split this cost.
• Prepaid costs: Ongoing fees for homeowners, such as property taxes and homeowners insurance. Some mortgage lenders require borrowers to pay for expenses like these up front.
• Other closing costs: Miscellaneous expenses that vary for every buyer. Natural disaster certification fees, real estate attorney fees, and pest inspection fees are a few common miscellaneous costs.

Buyers in South Carolina typically pay 3-5% of the purchase price in closing costs. For a $286,600 home — the typical home value in South Carolina — that's between $8,598 and $14,330!

» MORE: Closing costs for buyers in South Carolina

Frequently asked questions

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