South Carolina Cash-Out Refinance Rules & Guidelines

Are you considering a cash-out refinance on your South Carolina home? Interest rates are well below 4%, with the pandemic going on. Plus, Zillow reports home prices have risen by a solid 3.9% in the last year, with the real estate website ranking the South Carolina market as ‘hot.’

Housing prices in the Palmetto State are still rising, and interest rates are low. But things could change as the economic slowdown takes hold across the state and country. Now might be the best time to do your cash-out refinance before financial conditions worsen.

South Carolina Cash-Out Refinance Overview

When you buy a home in Charleston, Columbia, Myrtle Beach, or elsewhere in South Carolina, you are making a big investment. Many homeowners want to put money into their homes every few years to improve it and boost its value. If you want to add a bathroom or put an extension in the family room, where you are going to get the money?

Many South Carolinians are taking equity out of their homes with a cash-out refinance today. They may get a lower interest rate on their mortgage and the cash they need to improve their home. Home renovations make the home more enjoyable for you and your loved ones, plus it adds value that can pay you back when you sell.

For instance, Homeguide reports adding a 20×20 family room costs about $48,000 on average. If you owe $200,000 on your home and have a $300,000 mortgage, you may be able to refinance it for $250,000 and take the rest in cash for your family room extension.

Rules & Guidelines on South Carolina Cash-Out Refinance

Your mortgage lender will require you to make an application and prove that you can afford the new, higher payments. Most lenders require at least a 620 credit score but 700 or higher will get you the lowest interest rates. Make sure your debt-to-income ratio is below 50%, too. Some lenders may require a lower DTI, so check with your South Carolina lender.

Additionally, you need at least 20% equity in your property to do a cash-out refinance. Note that you are not allowed to borrow more than 80% of your property value in South Carolina, so you can only take out so much equity.

Considerations With a South Carolina Cash-Out Refinance

Before you do your cash-out refinance in South Carolina, keep the following points in mind:

  • Closing costs: The average home in South Carolina costs between $200,000 and $300,000. Closing costs average about 1.17% of the sales price, so your closing costs could be between $1600 and $2400. Before you close on your loan, be sure that you will live in the home for 3-4 years so that you save more in interest on your lower rate than your closing costs.
  • Interest rates vary. Sure, interest rates during the pandemic are low, but they swing up and down. Even if you find a 30-year fixed rate at 3.3%, you may not qualify unless you have a top credit score and little debt.
  • New appraisal: Your lender will ask for a new appraisal at your cost to check what your home is worth in today’s real estate market. The average home appraisal in South Carolina costs $343.
  • Adding home improvements can increase your home’s value, but you also are taking on more mortgage debt. Be certain you can swing the higher payments or you could lose your home.
  • If you add square footage to your home with a family room extension, you will increase the value of your home. How much depends on many factors, but a $48,000 20×20 family room extension could add $15,000 to the value of your home.

Final Thoughts on South Carolina Cash-Out Refinance Rules & Guidelines

Home prices are still on the rise in South Carolina for now, and interest rates are low. Refinancing and pulling cash out is tempting.

But the real estate and mortgage market are volatile during the pandemic. Things might change quickly. It is a good idea to get your cash-out refinance going as soon as you can before interest rates climb or the value of your home drops. There also are reported backlogs of applicants waiting to refinance their mortgages, so getting going sooner than later may be the thing to do.

South Carolina Cash-Out Mortgage News

  • Home Interest Rates Drop to Historic Lows in South Carolina During Pandemic: If you are thinking about buying a home or refinancing a home in South Carolina, now is the time to do it, experts in the state say. One South Carolina credit union reports it has not seen interest rates this low in 15 years. (
  • Buying or Refinancing? The Mortgage Rate Frenzy Is Back: Mortgage rates are near historic lows under 4% during the COVID-19 pandemic, making it a great time to refinance. States with the most refinancing activity this year are South Carolina, Texas, California and Illinois. (
  • Will the Coronavirus Crash the Housing Market? If you are thinking about refinancing in South Carolina, you should be aware that the current pandemic could cause housing prices to dip. While home prices have not dropped yet, the number of houses going up for sale dropped dramatically in March 2020. South Carolina has some of the most at-risk counties in the country for a drop in housing prices. (

Author: Bryan Dornan

Bryan Dornan is a financial journalist and currently serves as Chief Editor of Cash Out Refi Bryan has worked in the mortgage industry for over 20 years and has a wealth of experience in providing mortgage clients with the highest level of service in the industry. He also writes for RealtyTimes, Patch, Buzzfeed, Medium and other national publications. Find him on Twitter, Muckrack, Linkedin and ActiveRain.

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