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Compare mortgage rates in South Carolina.
Key Points
• Mortgage rates in South Carolina are typically right around the national average.
• Mortgage interest rates are influenced by various economic factors such as inflation, unemployment rates, and the Federal Reserve’s monetary policy.
• Personal financial factors, such as credit score and down payment amount, also have a significant impact on mortgage rates.
• South Carolina offers a full range of mortgage types including fixed-rate mortgages, adjustable-rate mortgages (ARMs), FHA loans, VA loans, and USDA loans.
• It’s important to consider not just mortgage rates but also fees and closing costs when choosing a mortgage.
Introduction to Mortgage Rates
If you’re on the hunt for a home loan in South Carolina, you’ll have a range of options. Making the smartest pick requires an understanding of current mortgage rates and available homebuyer assistance programs. This comprehensive guide delves into the factors influencing mortgage rates in South Carolina, explores various mortgage types, and provides tips for securing a competitive mortgage rate in the Palmetto State.
Mortgage rates are determined by both your personal financial status and larger economic factors. Economic factors that influence mortgage rates include the Federal Reserve’s interest rate decisions, inflation, and the unemployment rate. On the borrower’s side, credit score, down payment, income and assets, and the type of mortgage loan all play a role in determining the interest rate offered.
Where Mortgage Rates Come From
The Fed, formally known as The Federal Reserve, sets short-term interest rates that serve as benchmarks for other interest rates, including mortgage rates. When the Fed lowers interest rates, mortgage rates typically follow suit, making it more affordable for homebuyers to borrow money. And when the Fed raises rates, you can probably guess what happens next.
How Interest Rates Affect Home Affordability
If you’re buying your first home and it feels like a lot is riding on mortgage interest rates, you’re not wrong. A small interest rate shift can significantly affect the monthly mortgage payment and the overall cost of a home loan. For instance, a $200,000 loan with a 30-year term and a 4.00% interest rate would result in a monthly payment of $954. If the interest rate increases by just 1% to 5.00%, the monthly payment jumps to $1,073, adding an extra $42,774 in interest paid over the life of the loan.
Should Homebuyers Wait for Interest Rates to Drop?
First-time homebuyers, especially, often face the dilemma of whether or not to wait for interest rates to drop before purchasing a home. Rates can fluctuate, but waiting too long may result in missing out on a desirable property or facing rising home costs (or rising rents). If it feels like the time is right to buy and you can afford to do so, remember that you can explore a mortgage refinance if rates drop in the future.
South Carolina Mortgage Rate Trends
Looking at historical mortgage rate trends in South Carolina, shown below, might give prospective homeowners a sense of what’s in store. While rates have experienced fluctuations over the years, they currently hover around the 50-year average. (The Federal Housing Finance Agency stopped reporting state averages in 2018.)
| Year | South Carolina Rate | U.S. Rate |
|---|---|---|
| 2000 | 7.98 | 8.14 |
| 2001 | 6.84 | 7.03 |
| 2002 | 6.43 | 6.62 |
| 2003 | 5.67 | 5.83 |
| 2004 | 5.71 | 5.95 |
| 2005 | 5.95 | 6.00 |
| 2006 | 6.59 | 6.60 |
| 2007 | 6.42 | 6.44 |
| 2008 | 6.06 | 6.09 |
| 2009 | 4.93 | 5.06 |
| 2010 | 4.68 | 4.84 |
| 2011 | 4.48 | 4.66 |
| 2012 | 3.62 | 3.74 |
| 2013 | 3.85 | 3.92 |
| 2014 | 4.19 | 4.24 |
| 2015 | 3.93 | 3.91 |
| 2016 | 3.74 | 3.72 |
| 2017 | 4.04 | 4.03 |
| 2018 | 4.59 | 4.57 |
Historical U.S. Mortgage Rates
As you’ll see below, rates have generally trended downward since the early 1980s. Although today’s homebuyers may be concerned about interest rates, the current rates are relatively low compared to historical averages.
Factors Affecting Mortgage Rates in South Carolina
As noted above, some of these factors affecting mortgage rates are economic, while others are wholly within the homebuyer’s control. Let’s have a closer look:
Economic Factors
• The benchmark rateset by the Federal Reserve has an impact on other interest rates, including those charged by companies offering mortgages. When the Fed raises the federal funds rate, it becomes more expensive for banks to borrow money, leading to higher mortgage rates.
• Inflation, which increases the cost of living, can make it more expensive for lenders to lend money and devalue the money they do lend. To make up for this, lenders may increase interest rates.
• The unemployment rate, in turn, is a factor that may indirectly affect mortgage rates because when unemployment is high, the Fed often reduces its benchmark rate to try to spark job creation. Mortgage rates then tend to fall.
Consumer Factors
• Credit score is a numerical representation of an individual’s creditworthiness and one of the things a lender will examine during the mortgage preapproval process. Your score is based on factors such as payment history, credit utilization, and length of credit history. A higher credit score indicates a lower risk of default, and individuals with higher credit scores typically qualify for lower mortgage interest rates.
• The down payment is the upfront payment made by the homebuyer. A larger down payment reduces the loan amount that the borrower needs to secure, making the loan less risky for the lender. As a result, lenders may offer lower interest rates to borrowers who make larger down payments.
• Income and assets are other factors lenders examine to determine your ability to repay the mortgage. Borrowers with stable employment and a healthy financial cushion are more likely to secure favorable mortgage rates.
• The type of mortgage loanyou select can impact the interest rate offered. Adjustable-rate mortgages (ARMs) often start with lower initial rates compared to fixed-rate mortgages, for example. The Consumer Financial Protection Bureau notes that shorter loan terms typically have lower interest rates, although the monthly payment amounts may be higher.
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Types of Mortgages Available in South Carolina
South Carolina offers a diverse range of conventional and government-backed mortgages to cater to the needs of different homebuyers. Here are the most common types of mortgage loan:
Fixed Rate Mortgage
Fixed-rate mortgages provide peace of mind with a consistent interest rate throughout the entire loan term. This stability allows homebuyers to accurately budget their monthly mortgage payments and plan for the future without worrying about fluctuating rates.
Most people sign up for a 30-year loan term, although shorter terms are available. A 10- or 15-year term will result in higher monthly payments than a 30-year loan, but allow for faster payoff of the loan and lower total interest paid.
Adjustable Rate Mortgage (ARM)
Adjustable-rate mortgages (ARMs) are characterized by an initial period of lower interest rates, followed by periodic adjustments based on a predetermined index. This initial period, known as the fixed-rate period, can range from one to 10 years.
The lower initial interest rate of ARMs can be advantageous for homebuyers who plan to sell their property before the fixed-rate period ends. However, it’s important to carefully consider the potential for future rate increases and ensure that the ARM aligns with long-term financial goals.
FHA Loans
FHA loans, backed by the Federal Housing Administration, are designed to make homeownership more accessible to borrowers with less-than-perfect credit or limited down payment funds. FHA loans typically have more lenient eligibility requirements compared to conventional loans, making them a viable option for first-time homebuyers or underwhelming credit scores.
The Federal Housing Administration insures FHA loans, providing lenders with a safety net in case of borrower default. This insurance reduces the risk for lenders and allows them to offer FHA loans with more favorable terms, such as lower down payment requirements and potentially lower interest rates.
VA Loans
One of the most significant advantages of VA loans is the elimination of the down payment requirement. This feature makes homeownership more attainable for those who may not have the funds for a substantial down payment. USDA loans, provided by the United States Department of Agriculture, are tailored to borrowers whose household income falls below a certain level and who are seeking to purchase a home in a rural area. These loans offer favorable terms, including no down payment requirement, competitive interest rates, and flexible credit guidelines.
Conventional mortgage loans typically have a maximum lending limit set by the Federal Housing Finance Agency (FHFA). For 2024, the conforming loan limit for a single-family home in most parts of the country (and all of South Carolina) is $766,550. Loans that exceed this amount are considered jumbo loans.
When searching for a home, location plays a crucial role in the cost of living in the U.S. — including home prices and mortgage costs. South Carolina offers a diverse range of cities and towns that cater to different budgets and preferences. The cost of living in an area significantly impacts housing affordability. The Cost of Living Index (COLI) provides a comparison of the cost of living in different states relative to the national average. South Carolina has a relatively low COLI, making it an attractive option for homebuyers seeking affordability. Some of the most affordable places to purchase a home in South Carolina include:
• Spartanburg: The average home value here is $221,227, according to Zillow, well below the national average, which tops $360,000.
• Beaufort: Homes average $401,750 in this island locale near Charleston.
• Fountain Inn: A historic town not far from the larger Columbia, Fountain Inn has an average home value of $291,785.
• Batesburg-Leesville: Average home value here is just over $155,000, very reasonable — especially given the proximity to the larger city of Columbia.
• Georgetown: This is a welcoming beach community with an average home value of $263,243.
The most expensive places to purchase a home in South Carolina tend to be beach communities, including Kiawah Island, where the average home value is $1,943,246 and Hilton Head, where homes average $765,077. Obtaining a competitive mortgage rate can significantly reduce the overall cost of borrowing. As we’ve seen, even a small difference in interest rate can result in substantial savings over the life of the loan.
Shopping around for mortgage rates is essential to ensure you’re getting the best deal. Don’t settle for the first offer you receive. Compare multiple lenders to find the most competitive option, and make sure to include upfront costs and closing fees in your comparison. Obtaining preapproval for a mortgage puts you in a stronger position when making an offer on a property. It demonstrates to sellers that you’re a serious buyer and can secure financing. Preapproval (not to be confused with prequalification, an earlier step in the process) also allows you to move quickly when you find the right property, as you’ll already have a clear understanding of your borrowing power.
South Carolina provides a range of programs to support homebuyers, especially first-time buyers and those facing financial constraints. These resources include: South Carolina offers several programs tailored to first-time homebuyers, including: • The South Carolina Housing Finance and Development Authority (SCHFADA) offers a variety of loan programs, including the First-Time Homebuyer Program, which provides low-interest loans and down payment assistance.
• The USDA Rural Development Guaranteed Rural Housing Loan Program provides no-down-payment loans to eligible borrowers in rural areas.
• The Federal Housing Administration (FHA) offers FHA loans with flexible credit requirements and low down payment options.
South Carolina offers forgivable down payment assistance to all qualified homebuyers. The home must be occupied for 15 years before the payment is fully forgiven. Before you get serious about a home search in South Carolina, take advantage of these helpful tools to help set your home-buying budget, determine your down payment amount, and get a sense of what your monthly mortgage payment might be.
Punch in your home loan amount and a new interest rate, and we’ll estimate your payoff date.
Enter a few details about your home loan and we’ll provide your monthly mortgage payment.
Provide us with a few details and see how much you can afford to spend on a home purchase.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided. In addition to conventional refinancing options, homeowners with FHA-insured loans may benefit from the FHA Streamline Refinance program. This program allows borrowers to refinance their existing FHA loan into a new loan with a lower interest rate without the need for a new credit check or appraisal. VA loan holders may consider the Interest-Rate Reduction Refinance Loan (IRRRL) to lower their monthly payments. This program allows eligible borrowers to refinance their VA loan into a new loan with a lower interest rate without the need for a new credit check or appraisal.
Closing costs associated with purchasing a home in South Carolina typically range between 3% and 6% of the purchase price. These costs may include loan origination fees, appraisal fees, title insurance, and other administrative charges. The specific closing costs in South Carolina can vary depending on the value of the property and its location. Higher-priced properties and those located in certain areas may incur higher closing costs.
South Carolina’s mortgage market provides a diverse range of options for homebuyers, catering to different financial situations and preferences. By staying informed about current mortgage rates, exploring assistance programs, and carefully considering refinancing options, individuals can make strategic decisions that align with their financial goals and achieve their dream of homeownership in the Palmetto State.USDA Loans
Jumbo Loans
Popular Places to Get a Mortgage in South Carolina
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Tips for Securing a Competitive Mortgage Rate in South Carolina
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Take Advantage of South Carolina Mortgage Resources
First-Time Homebuyer Programs
Down Payment Assistance Programs
Tools & Calculators
Run the numbers on your home loan.
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Refinancing Options in South Carolina
Closing Costs, Taxes, and Fees in South Carolina
The Takeaway
FAQ
Will mortgage rates drop in South Carolina?
Predicting future mortgage rate movements is challenging. Your best bet is to keep in close contact with a mortgage lender you trust, who is likely to be watching the rates even more closely than you are.
Will mortgage rates ever go back to normal?
The only thing “normal” about mortgage rates is that they are ever-changing. Mortgage rates have fluctuated throughout history because they are influenced by economic factors, and there isn’t really a specific level considered normal.
Will South Carolina home prices ever drop?
Real estate markets are subject to many factors that influence home prices. While prices in South Carolina have generally appreciated over time, there can be periods of market fluctuation or correction. Predicting future price movements is difficult, however.
Is it a good time to buy a house in South Carolina?
The best time to buy a home is when it feels right for you. There is no one-size-fits-all answer. Examine the inventory (and prices) of available homes, consider your personal financial situation, and weigh your long-term goals to make an informed decision.
How do I lock in a mortgage rate?
Locking in a mortgage rate involves securing a commitment from a lender to provide a specific interest rate for a certain period. This can be done by obtaining a rate lock agreement, which sometimes means paying a fee. The length of the rate lock can vary and should be discussed with the lender.
How do mortgage interest rates work?
Mortgage interest rates represent the cost of borrowing money from a lender to finance a home purchase. Lenders determine interest rates based on various factors, including the borrower’s credit score and loan term; however, rates are also guided by prevailing economic conditions. Your interest rate governs both your monthly mortgage payment amount and the total amount of interest you’ll pay over the life of the loan.
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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