A Step-by-Step Guide for Buying a Home in Nevada
- When buying a home in Nevada, you will use an escrow process. An escrow agent, closing agent, or representative from a title company will be required to complete the transaction.
- Your funds and the purchase contract will be held in escrow by a neutral party until the agent verifies that both parties have completed their roles properly.
- All the documents are signed and payments are made. Within a few days, the escrow company will release the funds and the listing agent will give you the keys to your new homeowner.
Phase 1: Disclosures and Due Diligence for Buying a Home in Nevada
When you are in contract to buy a home in Nevada, these are the initial steps you need to complete. You can usually start Phase 2 at the same time.
- First, an offer will be accepted by the seller. Once a contract is signed, the escrow process will begin.
- A deposit, called the “earnest money” will be placed with the seller’s real estate broker, an escrow agent, or an attorney, depending on the nature of the contract. (It won’t be given directly to the seller.)
- As the buyer, you will then review and sign off on any disclosures, which are usually attached in a form as an addendum to the purchase contract. These disclosures will vary, but they are based on the type of property. This is required by law, and sellers usually see it as beneficial as they can then work the disclosures into the sale price. Because of the initial disclosures, they may be less likely to allow reductions and credits.
- Buyers are now expected to use the due diligence period to perform inspections on the home and check for other factors that may influence their interest in the home, including schools and the general neighborhood. During this period, the buyer can terminate the contract without penalty. They will need to perform various inspections, including a general inspection and a termite inspection. A property survey may also be requested by some buyers.
- If the buyer finds any issues, they can report them to the seller and terminate the contract. They can also ask the seller to remedy the situation. In Nevada, the due diligence period extends by the amount of days is takes the seller to respond to the requests. Sellers can also ask for a “limit of liability” and place a cap on the amount they’re willing to pay for repairs and certifications due to defects uncovered during inspections.
- The buyer can now negotiate a home warranty, also known as a “protection plan.” This covers the major appliances from failure for a certain time period, generally one year.
Phase 2: Securing a Mortgage in Nevada
For most people, purchasing a home means taking out a mortgage loan. Unfortunately, this process can be complicated and stressful. When you follow the right steps, however, it’s easier than you might think.
- The first step to securing your loan for buying a home in Nevada will be to submit a mortgage application. This can be done either through your mortgage broker or directly to your lender.
- Assuming you are approved, your lender will issue a “Good Faith Estimate,” also known as a GFE. This will be issued to the buyer and it will describe the estimated closing costs, which will likely differ slightly from the final total.
- You will now have to send a series of financial documents to the lender. These will vary by situation and the type of loan (FHA vs jumbo, for example) but will generally include some of the following:
– Bank statements for several months in the past. This should include all accounts that you own.
– Information on your debt load, including lines or credit, rent payments, and all other financial liabilities.
– Tax returns for the past two years. These will be released to the lender using a specific IRS form.
– Any and all information that relates to your personal financial situation. This can include divorce settlements, child support, court judgements, or liens against your property. Essentially, if there is anything that impacts your finances, it will need to be sent to the lender.
– Explanation on any credit inquiries, which, statistically speaking, impact your credit risk.
– Verification of any deposits that are significantly large compared to your overall income. Lenders need to know where certain deposits came from, as well as the nature of the money. If it is a gift, you will likely need a “gift letter” from the donor. This should include the donor’s information, as well as a statement that the money is a gift and not a loan. It must also include the donor’s signature. The amount that requires a gift letter will depend on the size of the loan compared to your overall income. For example, a $5,000 gift to someone earning $40,000 a year may require a gift letter, but the same gift to someone earning $150,000 may not. Talk with your lender so you can get the letter as soon as possible.
– If requested by the lender, you may also need to bring updated information on any of the above points. Remember that a lender is trying to reduce their overall risk, and the more information they have, the better they can assess your overall credit picture. Bring the right information and you will increase your chances of approval, and don’t be surprised or offended if the lender request additional pay stubs, bank statements, or other disclosures.
- Your lender will now render a preliminary decision. If you are approved, they will issue a preliminary loan approval, a document that basically states their willingness to fund the mortgage assuming certain conditions are met. The conditions generally include an appraisal, as well as a requirement that there be no significant changes to your financial, debt, or credit situation before buying a home in Nevada. It may also include a clause stating there should be no material changes to the property.
- The next step will be an appraisal, which helps the lender verify the value of the home. An appraisal will be ordered by either the lending agent or the mortgage broker, and while they cannot request a specific appraiser, they can ask for a different one if they wish. If the appraisal comes in lower than expected, the lender may ask for changes to the purchase price or the down payment.
- When buying a home in Nevada, a financing contingency will often be used. This will state that the buyer must get pre-approved and schedule the appraisal within a certain date. This date is called the “financing contingency date.” If the buyer can’t reach the deadline, the seller is able to terminate the deal and the buyer will get their money back from escrow. In Nevada, the buyer has to pursue the loan and keep all parties informed on their progress.
- If all is still going as planned, the lender will submit a request for the title commitments, which is sent to the title company. The title company will examine the title for quality and compare it to the survey. If it’s good, they will issue a title commitment, certifying that the title is free and clear of issues. Title insurance may be ordered at this point.
- You will now need to purchase adequate homeowners insurance unless the property is already covered by a plan.
- Additional hazard insurance may also be needed, such as protection from fire and storms. If the property is in a flood plain, flood insurance will also need to be ordered. Make sure you keep documentation of insurance coverage.
Remember that the loan-application process for buying a home in Nevada can be long and complicated. If might seem frustrating to bring so many documents to the lender, but this is an important part of their overall work. To make the process easier, start early; if you can’t actually get the documents, at least understand how to get them when they are needed. Also, avoid making any significant changes to your financial situation at this time. If possible, don’t change jobs, and don’t borrow money or take out a car lease. Any changes could trigger a restart in the entire mortgage-loan process, so avoid this issue if at all possible.
Phase 3: Closing the Deal
For the buyer, the closing process is likely the easiest phase, but you still have to prepare certain documents and be available for meetings. It usually takes a couple of days to a week to complete, and in Nevada the transaction will not need to be consummated with all parties at the same table. Nevada is an escrow state, so closing will consist of these steps:
- The buyer’s lender will send loan documents to the escrow agent and the final date for settlement is scheduled.
- A final walkthrough of the home will occur. This is to verify that the home is in the same condition as when it was appraised and viewed by the buyer.
- A settlement will convene at the office of an escrow agent, closing agent, or title company. In most cases, the seller will sign the closing documents first.
- The buyer then has a chance to sign the documents for buying a home in Nevada, including the final loan documents.
- The buyer now pays the remaining sum of their down payment and closing costs. This is give to the escrow agent, closing agent, or a representative from the title company. This is paid through a wire transfer or cashier’s check. It may be done in advance to speed the process.
- The deed will be recorded with the city or county and the escrow agent will release the funds to all parties.
- Congratulations! You can now receive the keys to your new Nevada home. Unless the contract has a clause of some type, you officially take possession of the home!
This article in meant for general information only. Laws are subject to change, so always speak with a qualified professional before making any decisions.