As property buyers have found it harder to get conventional financing, alternate forms of financing, primarily through government-backed loan programs, have gained popularity.
It is estimated that in the near future, 50 percent of loans for new purchases will be from non-traditional funding sources like the Federal Housing Administration, Veterans Affairs, the S.C. Housing Authority and the U.S. Department of Agriculture, said Scott Tripp, a home mortgage lender at BB&T.
Between 2007 and 2009, the number of FHA loans made in Horry County increased 594 percent, according to the agency.
"The private mortgage insurance companies have severely limited to whom they will write private mortgage insurance," he said. "Government programs are far more affordable in the current marketplace and require less down."
Conventional loans are harder to get than they were a few years ago and as a result, the alternatives - which require less money down, lower credit scores and more paperwork - are the only option for some home buyers.
While there is always a risk in underwriting loans when there is no down payment involved, the housing programs seeing success now never changed their policies during the mortgage boom and managed to come out fairly unharmed, Tripp said.
Tripp is a member of the Coastal Carolinas Association of Realtors and facilitated a workshop for the group this week that outlined the types of loans available through the various government programs.
"If they know what kind of loan program is involved, then they know more about what is involved and what they will need to do," Tripp said. "It is critical to everyone's success in the current market."
About 30 Realtors attended the workshop to learn about the options currently available from representatives of the FHA, the VA, the S.C. Housing Authority and the USDA.
"As agents, we need to be able to direct our clients in the right way that they have options," said Beth Ross, the broker-owner of Carolina Pines Realty.
She said some buyers don't have the cash for a down payment but could make monthly mortgage payments; these loan programs offer those buyers a way to get a home.
Ross said one of the most interesting programs she learned about is the FHA 203(k) program, which allows people purchasing a house as a primary residence to borrow money on the home to make necessary repairs. She said she also learned more about the availability of VA loans, which allow veterans to purchase a home with no down payment.
Claude Spurlock, the director of mortgage production for the S.C. housing authority, discussed programs available for first time home buyers through his agency. First-time home buyers purchasing a home for less than $130,000 can get $5,000 toward their down payment.
Many Realtors think that the housing authority only handles low-income housing but the first-time home buyer division is what pays the bills of the agency, Spurlock said. The agency has about $200 million in funding for this year.
"So many of the Realtors were not even aware that these programs are available to their buyer clients," said MaryAnne Dorio, the broker-in-charge of Nextage Infinity Realty, who helped organize the workshop. Dorio said she learned more about state and VA programs.
She said that conventional lenders are gun shy about lending right now, and while they are writing some loans they are hesitant to take any risk.
"These programs have stepped up to the plate and said we'll lend you the money but it has to be a habitable property and meet our criteria," Dorio said. "I personally am suggesting them to my clients ... just giving them some more avenues."
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