Archive for November, 2008

Options are additional items that the Builder will add to the house/condo at your request. There is normally a cost to this, but sometimes you might be able to get an option for free. Upgrade is when the Builder will install or use a higher grade of material or a different material altogether. Common examples of upgrades are for flooring, light fixtures, wood working, and landscaping. Beware of builders who offer reductions or incentives for going with their Mortgage company. (See article on “Beware of Builder controlled Mortgage Company”.)

1 out of 4 Homebuyers will buy new construction. Often the demand outpaces the supply, so in some circumstances you may find the Builder/Developer will not accept offers until a certain day, or may require you to be pre-approved with a Las Vegas Mortgage Lender. In some developments, your name may have to be put on a waiting list for the next phase. Beware of the nature of buying new construction in Las Vegas.

The ability to choose your own color for your walls, lighting fixtures, room layout and to be the first person that lives in a house can be a very rewarding experience. This is why many people choose to buy a new construction home in Las Vegas. So expect the competition to be fierce for the more in-demand developments. It is very common for the Builder to require you to place a larger deposit and to satisfy certain demands/restrictions that may not be common for other areas in the country.

Even though the Las Vegas real estate market is hot, you should still negotiate. If you are a fully qualified Buyer who has all the resources to close on the transaction, there may be certain terms you can ask for. When price is non-negotiable, there may be  terms of the contract that can work in your favor. So with the assistance of your Las Vegas Realtor, your dream of owning Las Vegas will be a reality.

Avoid Paying PMI on a Nevada Mortgage
Did you know that by using a Piggy Back loan you can avoid paying PMI? This can be used either when you purchase or refinance your Las Vegas home. By using this loan you will be able to save as much as a couple of hundred dollars each month on your Nevada mortgage. 

The average home buyer often doesn’t have the 20% down as required by most conventional Nevada Mortgage Lenders. This is also common in the case of a refinance; your average home owner does not have 20% in equity at the time of the refinance. Although a lot of homebuyers/owners can qualify because of PMI, it does increase payments significantly. You can view the portion you pay for PMI as rent because that portion of your payment does not benefit you at all.
Private mortgage insurance (PMI) is paid to a Mortgage insurer who protects the Lender against loss in the event of a default on the mortgage. The conventional thought in the Lending industry is that if a default occurs and the property has to be sold quickly, often it will sell for less than 80% of the value. In this situation, the Mortgage Insurance company will step in to pay the Lender for any loss incurred.

The loan amount needed to close your Las Vegas purchase or refinance that is above the first 80% is the Piggy Back Loan.  By having a 80% first mortgage only and have a 2nd mortgage (Piggy Back) this avoids the PMI requirement. An additional benefit is that you will be paying on the principal on both loans and the interest may be tax deductible. Payments toward PMI are not tax deductible at all.
The staff at Vegasbestmortgage.com can help you structure a loan package to take full advantage of the Piggy Back loan. For example, we can help a borrower who needs a 95% loan-to-value on a purchase or refinance of a Las Vegas with a 80% first mortgage and a 15% 2nd mortgage. By going this route you will not have to pay PMI. You will have two separate mortgage payments to two different mortgage companies. The interest in the 2nd mortgage is always higher than the 1st mortgage, so by going this route you should expect that. Having the two mortgages is easily justified, though, when you consider the net monthly savings incurred by not having to pay PMI. The 2 loan route will save you more.

Sometimes the Las Vegas home-owner opts to have a Home Equity Line of Credit (HELOC) instead of a fixed rate 2nd mortgage for a Piggy Back. The major advantage to having a HELOC is that as you pay down the debt you have access to the funds that can be drawn out for such things as buying a new car, college education, or home improvement, without having to reapply. The other feature of this particular loan is that the required payment is interest-only, so you must make an effort to pay more than the required payment in order to create the available credit.
Alternatively, this second mortgage can be structured as a “closed-end” loan with a fixed payment. This is for a fixed period of years (15, 20 or 30) with equal payments being made over that period. This alternative is better for a borrower who lacks the discipline to make larger payments on the Line of Credit mentioned above.    

Take this into consideration: for a Las Vegas home buyer who purchases a $400,000 home with 5% down, the PMI payment would be $243 on a 95% loan. Now let’s take a look at how we have structured a Piggy Back loan by having the borrower get a 80% mortgage and a 15% second mortgage. This will result in a savings of $171 per month. And without having to pay the PMI, your net savings over 5 years is $13,501. Over 10 years the savings will amount to over $31,000. The borrower net worth will increase by a significant amount with the savings and the appreciation of the Las Vegas home value.

Remember that for most of us, our mortgage is the biggest financial decision of our life. Please consult only with an experienced full-time professional. Call the staff at Vegasbestmortgage.com today.

Find out about the Developer
So you have your heart set on owning a piece of Las Vegas real estate. Now let’s take a look at some developments that you are interested in. But first, are you looking for a newly constructed Las Vegas single family home, Las Vegas town homes, or a Las Vegas condo? This will help you determine which developments you should visit and which to ignore. Other criteria such as price range, available options, and amenities should also be pre-determined. Get price lists of options and upgrades from the Builders in each development that interest you. Always keep in mind that the builder representative always represents the builder. You should consult with a Las Vegas Realtor before you meet with any builders.

If you are interested in a home, find out from the Builder what the total cost will be. This may require setting up an appointment and may take as long as a few hours. Remember, this lays out all the costs associated with your new Las Vegas construction home. Also find out as much as you can concerning warranties, features, options, etc that are available. And try to make the most of your section up front. There is usually a charge if you change something once the blueprints have been drawn. 

Most if not all Las Vegas Home Builders will require a pre-approval. They need to know that you’re a qualified buyer because they spend a lot of time on your project and they want to know you will be able to close on the transaction. We are more than happy to help you with this process.

Help your Agent look out for you. Our agents must accompany the buyer on the initial visit to a New Las Vegas Builder’s office. By having someone that does this full time and knows about the in and outs of buying Las Vegas real estate, you can take comfort in knowing that your investment in Las Vegas is safe.

Professional experience and knowledge about the local real estate market is what you need on your side. We have a list of local Realtors that we can recommend to you.