If you’re interested in purchasing a property here, but will need financing, be aware that you will have to work with a local lender or mortgage broker. Your “hometown banker” is not going to be able to help you with a mortgage here!
Loans on a primary residence will typically require 20% down, and for a second home or investment property, 25% down. Only one bank here is currently lending on land, with 10% down, amortized over 15 years. Getting a loan on a commercial property is difficult, and forget getting a loan on a distressed (hurricane damaged) property. You can find a list of approved lenders on our website (www.stcroixislandlife.com) in the Resources tab under Service Providers.
Even for those who have little to no financial hurdles to buying a home, the purchase process when buying a home on an island can be complicated, with unexpected challenges and delays arising along the way. But for those of you in a more challenging financial situation, these hurdles can dash your dream of owning a home in St Croix. If you have large student debt, are going through a divorce or bankruptcy, have medical issues, are experiencing job loss, or even have a new job, all of these life events can present unique challenges when trying to get financing on a property in St Croix.
Credit
Just like in the States, your credit score plays the biggest role in determining what types of loans you will be eligible for. The score, which ranges between 300 – 850 (the higher the score, the lower the risk), takes into account how timely you are in paying your bills, what percentage of available credit you’re using, the average age of your lines of credit, your total number of accounts, derogatory marks in your credit report and other related factors. Knowing your credit score is a good way to start out the buying process and get an idea of what home price range is available to you. You can get your score online through several free or paid apps, and should probably do so even before contacting a lender here, which you will need to do to get pre-approved and prior to engaging a Realtor.
Carefully check your credit reports and have any errors corrected. If you have a lot of credit card debt, it would behove you to work to pay down the balances and lower your debt-to-income ratio. A lender may approve you for a bigger loan than you can realistically handle, so take a hard look at your budget and write down all of your monthly expenses, and look at your monthly income after taxes and figure out how much you can afford for a mortgage without stretching yourself too thin. If you need help in estimating what your expenses will be here on the island, give us a call or shoot us an email; we’d be happy to assist.
Coming Up With a Down Payment
One of the top hurdles for new buyers is coming up with the down payment. While some first-time buyers are able to score down payment rates of as little as 3.5 to 5 percent, most are expected to sock away at least 20 percent, even 25 percent if you are keeping your existing home. To increase the pace of saving, financial experts advise setting up an automatic savings program, cutting expenses or borrowing from relatives or a retirement account.
Consider Cost of Living
If you are thinking about moving to St Croix, one of the biggest considerations should be understanding what additional costs you may have here. Most likely, housing prices here are going to be far more than in your town. Make sure you have a good idea about the market here before you sell everything and buy your plane tickets! Even grocery prices will likely be significantly higher here than where you are. The worst thing that could happen is you move and find out you can’t afford to live here. Financial planning makes all the difference, and it can help avoid future panic or crises.
Limited Inventory
While our inventory shortage is starting to improve, it’s still cause for concern here in St Croix. An insufficient supply of low- to mid-priced homes continues to drive up prices and push prospective buyers out of the market. With low inventory keeping prices elevated, and scarcity of reasonably priced rentals, your options are limited.
You can count on us here at St Croix Island Life Real Estate to do some hand-holding through the buying process, and we can and will put you in touch with reputable lenders, inspectors, insurance professionals, and even handymen to help you through the buying process and beyond. After all, it’s a small island, and we want to be friends with you long after your sale has closed!