Buying a new home can be exciting, adventurous and challenging all at the same time. With so many financing options available, it's important to educate yourself on the process to ensure you're making the best, most cost-effective long-term decisions. This Financing/Mortgage section provides step-by-step tips that will walk you through the entire home-buying process, from finding a qualified real estate agent to making an offer on your dream home. Also included is a glossary of real estate terms and a checklist of tips to expedite the loan application process.

A beautiful climate and prospering economy continue to draw thousands of new residents to Las Vegas every month, many in search of the American Dream of homeownership. The valley is home to hundreds of new and established neighborhoods, offering everything from quaint apartment homes to custom mansions.

"The ten years I've lived in Las Vegas, economic growth has been explosive creating new found wealth for many. Several industries have benefited from this growth, two of them, banking and financial services. New banks and investment firms open every day offering more choices for Las Vegas investors. With billions of dollars of work beginning on The Strip think long term as there is no end to this growth in sight."

–Michael Milano, ChFC

President

Milano Wealth Management

When it comes to deciding where in Southern Nevada to live, different people want different things. Some want to live close to work, while others prefer a certain school district. Still others might want to reside close to a park or church. Knowing what to look for when purchasing a home in Las Vegas will go a long way in making the home-buying process fun, exciting and relatively problem-free.

Creating the Right Team

A qualified real estate agent will be familiar with the pros and cons of neighborhoods and developments across the valley and will be able to help you narrow your search. An agent can also help you create the best team for the entire home-buying process. To purchase a home, you typically will need an agent, a mortgage company, title company, various inspectors, an insurance company and, depending on the transaction, an attorney.

You should expect your real estate agent to:

            *           Explain how the property tax system in Nevada works.

            *           Help you create a budget.

            *           Help you determine whether to purchase a new home or a resale home.

            *           Show you neighborhoods and homes within your price range.

            *           Negotiate the best possible price for the home.

            *           Explain the contract.

            *           Be present with you for all inspections.

            *           Expedite the paperwork between all parties involved.

It's important to find an agent you're comfortable with, and who seems accessible and willing to address all your questions and concerns.

Creating a Housing Budget

A real estate agent can help you establish a housing budget. The budget should be based on numerous factors including income level, amount available from the lending institution, your debt and budget, the amount available for the down payment and the interest rate. The agent will help you determine the maximum price you can afford to pay for a home. This number will probably be less than what the lending institution offers. The agent will also factor in taxes, insurance and any renovations (if needed) to give you a firm budget with which to plan. Your agent can also help you budget for incidentals, such as window coverings, new furniture and any alterations planned for the home.

Financing the Dream

A lender will evaluate your financial situation and provide you with a maximum amount you qualify for in the form of a mortgage. Before looking at homes, consider obtaining a pre-approval letter from your lender. This lets potential sellers know that financing is in place and that you're serious about the transaction.

To obtain approval, the lender will request a list of documents that provide a snapshot of your current economic condition. Many lenders – particularly in Las Vegas' hot housing market - have changed old rules requiring a 20 percent down payment and near-perfect credit rating. The federal government and lenders have even created special loan opportunities designed to fit different lifestyles and credit records. While this has many benefits, these new programs should be viewed with caution. The attraction of interest-only loans and 125 percent financing has the potential to put buyers in over their heads. Be realistic in setting your budget before you start house-hunting.

Before applying for a home loan, it's a good idea to secure a copy of your credit report (see sidebar, "Managing Your Credit Score). This will eliminate any surprises when talking to a loan officer. It also will allow you to verify the information on the report and clean up any errors that might exist before applying for a loan.

In addition to the dollar amount of the loan, you need to pay special attention to the interest rate. Lower rates enable buyers to afford a more expensive home without becoming "house poor" – a condition in which the homeowner can afford the house but little else.

If possible, you should steer clear of origination points, which lenders use to cover the expense of making a loan. According to www.Bankrate.com,

one point equals one percent of a mortgage loan.

To help lower the interest rate of your loan, you may want to "buy down" the points by paying upfront for a lower interest rate. Points paid are eligible for deduction from federal income tax for the year in which they are paid; however, if the seller pays any of the points – a popular negotiation tactic – both the buyer and seller need to agree on the deduction before it's taken.

There are many different types of loans:

–Conventional

This is the traditional 15 or 30-year home loan. Variations include jumbo loans (loans for more than $240,000), conforming loans (loans under $240,000) and adjustable rate mortgages (ARMs).

–Veterans Administration (VA)

VA loans are funded partially through the Veterans Administration. The VA recently expanded its qualifying criteria to include more veterans, so all vets should contact the VA for the most current information. For more information, visit www.va.gov.

–Department of Housing and Urban Development (HUD)

This federal agency oversees the Federal Housing Administration (FHA), Fannie Mae and Freddie Mac. Programs created through HUD and these other agencies meet the special needs of certain Americans. Special loans are available for teachers, policemen, firemen, senior citizens, people with disabilities, first-time homebuyers, religious groups and emerging markets. HUD's Web site provides information on purchasing a home in Nevada. For additional information view "HUD in Nevada" at www.hud.gov/local/index.cfm?state=nv.

–Other Loans

There are other special loans designed to make housing affordable for all Americans. Each program has different requirements, and not all of them are salary-related. Some national programs include:

            * ACORN

            *           Alliance Housing Assistance Program

            *           AmeriDream

            *           CHAPA Homebuyer Gift Program

            *           Neighborhood Gold

            *           NeighborWorks

            *           The Genesis Program

            *           The Nehemiah Program

Typically, if your down payment is less than 20 percent, you'll need an escrow account. With an escrow account, the lender automatically places a portion of your monthly note into an account specifically designated to pay for insurance and taxes. The mortgage company is responsible for paying the annual bills from that account.

Viewing Homes

Once you have your budget worked out and your financing in place, the fun part begins – house-hunting! The Las Vegas real estate market has every style of home imaginable. You can preview a multitude of choices from the comfort of your own living room by going to the Greater Las Vegas Association of Realtors(R) web site, (www.lasvegasrealtors.com). The site allows you to search every available resale home in the valley.  Coverage includes Las Vegas, North Las Vegas, Henderson, Pahrump, Greater Clark County and Southern Nye County. Search fields include home style, price range, number of rooms, acreage, area of town and age of home.

NEW HOME COMMUNITIES

New home communities are being developed every day in Southern Nevada. While the price of a new home is typically higher than that of a resale (existing, previously owned home), it also has benefits. Everything in the home is brand new and buyers often have the option of customizing the home to fit their personal taste. New home developments have their own realtors and sales staff on site to assist prospective buyers. You also have the option of bringing your own realtor to a new home community to help with the negotiation process. Most communities have a policy stating a realtor must accompany a prospective buyer on his or her first visit.

Negotiating the Transaction

According to the National Association of Realtors, this is where consumers believe the real estate agent "earns his or her commission." As a buyer, you want your agent to be a tough, yet gracious negotiator who will obtain the best purchase price possible.

Every agent has their own method of negotiation and will already have a good idea of what the market will bear before negotiations begin. Most real estate agents will research the sale price of other, similar homes that sold recently in the area you're looking at. In addition to the comparative market analysis, an agent will account for and explain to the buyer the various nuances of the different streets in the neighborhood. While two houses in the same neighborhood may look identical from the outside, there are many factors that impact the asking price. If a home has substantial upgrades to cabinetry, appliances and flooring, or has a swimming pool or landscaping, the asking price can be increased by tens of thousands of dollars. 

Once you find a home you like, your real estate agent will be responsible for presenting your official offer to the seller's agent (the realtor representing the home seller). Your offer can contain something called "contingency clauses," or provisions associated with the offer. For example, you may offer "X dollars" based on the contingency that the owner leave the refrigerator or washer and dryer, include a home warranty, take care of major or minor repairs, or even pay part of the points at closing. If the seller accepts the offer, you'll need to place "earnest money" into an escrow account to demonstrate serious interest in purchasing the home. The typical escrow amount is $2,000 but may be as little at $1,000 or even a percentage of the purchase price.

Inspectors

Using the services of a good home inspector can save you money and give you peace of mind. An inspector will conduct a thorough evaluation of the property. Home inspections are advised not only for resale homes, but for new homes as well. 

The prospective homebuyer typically chooses the inspector (ask your realtor for referrals) and pays for inspection, which is based on the size of the house and its systems (such as pool, spa, irrigation, etc.) Inspectors spend approximately  one hour for every 1,000 square feet of home, examining the roof, main electrical panel, foundation, windows, doors, faucets, air conditioner, electrical receptacles and major kitchen appliances.

Upon completion, the inspector will walk you and your real estate agent through the home to explain any necessary renovations or flaws in the home. Most agents will have good knowledge of the area and should explain any home flaws common to the neighborhood.

The inspector might also recommend further examination in areas such as plumbing, electrical, termite control, foundation or air conditioning. Specialized inspectors can provide specific information on the condition of the problem area and provide a home repair estimate. The cost of repairs can give your real estate agent leverage to either negotiate a lower price for the home or have the current homeowner pay for necessary repairs.

NEVADA PROPERTY TAXES

In Nevada, all property is subject to taxation. In Clark County, the county's tax assessor values all property to be taxed. The assessor is required by Nevada law to discover, list and value all property within the 88 tax districts in Clark County. The tax rates for these districts are based on the amount of monies budgeted to them for the necessary maintenance and improvements of their facilities and services. The tax monies collected for the districts pay for schools, roads, police and fire protection, along with the other government and public services.

For more information on property taxes in Clark County, visit the county at www.co.clark.nv.us/

assessor/assessor.htm.