Welcome back to our Series on Oceanfront Condos! Last week, we discussed some important information to help you determine what type of property investment might be best suited to your needs. CLICK HERE TO READ THAT ARTICLE
At BRG, we're lucky to have some of the most knowledgeable Oceanfront Condo Specialists in the Myrtle Beach area. This week, one of our experts, Mark Loomis has shared some information about financing your oceanfront condo purchase.
Since almost all oceanfront condo buildings in the Myrtle Beach area are "condo-tels," buyers cannot obtain conventional, 30-yr fixed rate loans. It is also quite likely that you won't be able to use your local hometown lender either because most lenders are not familiar with condo-tel loans. A condo-tel loan requires a certain lender with experience in these particular types of loans. Knowing this upfront will save you and your REALTOR a lot of time and disappointment. It's awful to find the perfect oceanfront getaway and start dreaming of family beach vacations only to find out you're not going to be able to get the loan terms you were imagining!
A large majority of lenders sell their loans to Fannie Mae. Since Fannie does not purchase condo-tel loans, many lenders cannot make the loan. You may be an immensely qualified buyer, but the property may not be! If you have a particular lender that you have used in the past and really want to use, contact them and ask if they actually do "condo-tel" loans. Be sure to clarify that these loans are not purchased by Fannie Mae and that In order to do a condo-tel loan, the lender will need to keep the loan on their books for the length of the loan since they can not sell it unless they sell it to a private investor. Make sure you have this information sorted out with your preferred lender. If they determine they cannot make this type of loan, there are local lenders in the Myrtle Beach area who are familiar with these types of loans and have the experience and the ability to work with you on them.
A couple of the top lenders for condo-tel loans in the Myrtle Beach area are:
CresCom Bank
CresCom will finance 1 BR or larger condo-tels. They do not finance efficiency units.
For a 1 BR condo (under 750 heated sq. ft), you should expect to pay 25% down payment for a 15-yr amortization, 30% down payment for a 20-yr amortization, and 35% down payment for a 30-yr amortization. They have 5/1, 7/1, 10/1 ARMs as well as 10-yr, 15-yr, 20-yr, and 30-yr fixed rate. Rates will be approx. 5.25% - 6.375% with no point. You can pay 1 point and lower rate by 0.50%.
For 2 BR or larger condos (over 750 h.s.f.), you should expect to pay 25% down payment.
NOTE: Very important: CresCom does NOT charge a higher down payment or a higher interest rate for a buyer's 2nd condo or condo-tel purchase in this area. Their 1st purchase will be classified as a 2nd home and next one as an Investment. Most lenders will charge higher down payments and higher interest rates for the Investment purchase, but right now CresCom does not. So, if you are interested in buying 2 condos at the same time, then CresCom will give you the same rate/terms for both loans as long as you qualify for the loans.
SandHills Bank
Sandhills is the only lender who can finance an efficiency as long as the loan amount is $50,000 or higher.
Sandhills will ONLY do 2nd home loans, not Investor loans for condo-tels.
For a condo-tel loan with SandHills Bank, you can expect to pay a 25% down payment, up to 25-yr loan term. Efficiencies are limited to 15-yr loan term. Only ARM's offered. 1% origination fee.
In addition, you must maintain a deposit account with SandHills Bank and have the loan payment auto-drafted from that account. Rates are usually a little higher than CresCom.
Other lenders include:
CCNB (Coastal Carolina National Bank)
CCNB will loan on condo-tels but they have limitations. For example, they won't loan on conversion properties which are those oceanfront buildings that used to be hotels and then were converted to privately-owned condos during 2004-2006 (Landmark, Coral Beach, Compass Cove Pinnacle, Monterey Bay, Caribbean phase I, Sandcastle South, Breakers Boutique, Patricia Grand). You can learn more about these conversion properties in our previous article: CLICK HERE
South Atlantic Bank
South Atlantic Bank typically sells their loans to a private investor so the terms may not be as favorable as those lenders that keep their loans in-house.
The following OCEANFRONT condos are currently available for sale in the Myrtle Beach area.
Please call us at 843.883.6600 and ask to speak with one of our Oceanfront Condo Experts.