The condominium market on Hilton Head Island and in Bluffton is booming. We have seen a significant reduction in the amount of inventory of condominiums and all signs indicate this trend will continue throughout the summer. One thing buyers of condominiums need to be aware of is condominium insurance, also known as HO-6 insurance.
What is HO-6 Insurance?
When you buy a condominium on Hilton Head Island or in Bluffton, there is often a POA (Property Owners Association) that manages the complex for the owners. One of the things the property management does is contract and pay for insurance on the complex and monies to pay for this is taken out of your monthly fee. However, the insurance typically covers the exterior and standard replacement of the interior. If you upgraded your unit with granite, tile, etc. you would NOT be covered by the group policy. In this case you would benefit greatly from HO-6 insurance. In addition to covering any upgrades to your unit it would also cover the contents, loss of use if the property is used as a rental, and liability should someone get hurt. These policies often start around $350/yr., depending on the coverage. Prior to getting a HO-6 policy you should check with your lender, if you have a mortgage, to see if there are any requirements they have.
If you would like to know more about Condominium Insurance; i.e. HO-6 insurance, contact your insurance agent. If you have a minute, watch local insurance agent Kristen Hayrinen discuss this topic in the video below:
Real estate closings on Hilton Head Island and in Bluffton differ from what you may be used to in your state. A majority of soon to be owners are not at the closing but are done through either a Power-of-Attorney (POA) or a mail away (where documents requiring a signature are mailed to the client).
One of the role's of the attorney in the real estate transaction is to coordinate the closing with you, the lender, your realtor and the seller's attorney. The attorney is often the moderator of the transaction.
On the day of the closing, the Purchaser signs the required documents and funds are then transferred. However, this does not mean you will walk out of your attorneys office with the keys to your knew home in hand. Time is required for the funds to transfer and clear and paperwork to be processed. Typically, if you sign paperwork in the morning you will be into your home by that afternoon or evening. It is recommended for those coming from out of the area or for those scheduling contractors to allow 1-2 business days before moving in or scheduling work to be done. This allows time for any oversights to be corrected and does not leave you having to stay in a hotel while the issues are resolved. For more on the real estate attorneys role on Hilton Head Island and in Bluffton listen to what Chuck Wiseman and Jeff Reilley of Wiseman & Reilley, LLC have to say about the closing process in our video below:
One of the best things someone looking to purchase real estate can do, prior to beginning their search, is to talk to a local lender. For a number of different reasons 1) to see how much they can qualify for and 2) to see what type of loan might suit them the best. If you do not talk to a lender prior to conducting a real estate search you might be wasting your time. Often buyers will look long and hard before finding the 'perfect' property only to find out they do not qualify for the amount needed to purchase such a property. On the other hand, they might find they qualify for more than they thought and thus are able to purchase that one of a kind property they once thought was out of their price range.
With that being said there are a number of different loans a buyer may have to choose from. Let's take a look at some of these loans and what distinguishes each from one another.
CONVENTIONAL- These loans typically involve a loan amount of 97%, 95%, 90%, 80% or below the purchase price. If the LTV (Loan to Value of the property) is greater than 80% Mortgage Insurance (a.k.a. PMI) may be required since it is considered a higher risk to the lender. Conventional loans are most often used to purchase a primary residence, second home or investment property and often require a minimum credit score of 640. In South Carolina the conforming loan limit is $417,000. This means that the loan amount (not the contracted purchase price) is $417,000 or less.
FHA- On an FHA (Federal Housing Administration) loan a buyer can borrow up to 96.5% of the purchase price. This means you can borrow up to 96.5% of the value of the property. Typically those that use an FHA loan are borrowers with lower credit scores but are on the rise. You can only use an FHA loan for a primary residence and cannot use it to purchase a second home or investment property. The maximum loan amount on this type of loan is $387,500.
VA- (Veterans Administration) With a VA loan you can finance the entire purchase; i.e. 100% LTV. There is no mortgage insurance required on 100% financing. Yet, there is a VA Funding Fee unless you are exempt from such a fee, which is generally financed into the loan. As long as you qualify you can get a VA loan more than once however, it must be for a primary residence only (no secondary or investment properties). The maximum loan amount you can receive is $417,000.
RURAL HOUSING (USDA)- Those looking to use a USDA loan do NOT have to be first time homeowners. But, you cannot own another home in the immediate area. It is possible to get 100% LTV. USDA loans do not have mortgage insurance however, there is also a fee associated with this type of transaction that is paid directly to the USDA. Unlike a VA the USDA loan does have a monthly fee which is relatively low compared to a conventional mortgage insurance payment. USDA loans are area and income specific. Make sure to check yours and the properties eligibility with the lender. This type of loan must also be used to purchase a primary residence and cannot be used to purchase secondary or investment property. If you have a family of four you cannot earn more than $80,300/yr and for a family of 5 or more you cannot earn more than $106,000.
NON-CONFORMING/JUMBO- These loans are used for primary or secondary homes on amounts over $417,000. The rates are generally higher than conforming loans and the down payment requirements typically increase the higher the sales price. However, make sure to check with your lender as sometimes special financing may be offered.
For more information on Mortgages and Lending visit the Finance page of our website at http://www.pnprealestate.com/finance.html. You will find some of the sharpest minds on Hilton Head Island and in Bluffton to answer your most asked questions. If you do not find the answers you are looking for contact us and we will get the answer for you.
We are proud to announce the launch of our new website www.pnprealestate.com. This website was created so Buyers & Sellers alike could have access to an abundance of information when considering owning or selling real estate on Hilton Head Island, SC or Bluffton, SC. The website will eventually be able to be accessed through www.hiltonheadrealestateinfo.com as well as www.blufftonrealestateinfo.com.
We built this website after listening to what you, the client/customer, had to say about the real estate process. Our research showed us you would much rather spend time listening to an expert (we have provided the best in the area) than reading page after page of information. We have taken the time to eliminate the garbage and given you the important things you will need to know when buying or selling real estate. Whether you are a first time visitor to the area, looking to purchase real estate or a long time resident looking to sell your property you will find our website second to none for information. And as many of you know in today's world, information is everything. We look forward to earning your trust and helping you buy or sell real estate on Hilton Head Island or in Bluffton. For more on PNP Real Estate and why you would benefit from working with us take a few minutes to watch one of our videos below:
PNP Real Estate
Our goal is to help you Buy or Sell your property in a timely fashion by providing you with all the information necessaryFor answers to all your questions contact us at (843)-338-6737.