Las Vegas Real Estate News

What Exactly Is A Loan Contingency?

Once upon a time, nearly every home purchase contract had a "loan contingency" or a "mortgage contingency". What this meant is that the sale couldn't move forward without a mortgage. If the buyer couldn't get a mortgage on the house, they got their earnest money back and the contract was void.

Today, things have changed. The norm is to be a pre-approved for a loan.

Nonetheless, there are still plenty of occasions when a loan contingency needs to be used. The usual reason is because the lender needs to make sure that home fits their financing needs.

Here are some loans will frequently have a loan contingency on them.

  • VA loans - Guaranteed by the Veterans' Administration, these homes need to meet a specific set of guidelines.
  • FHA loans - Also guaranteed by the federal government, there are often some very strict guidelines for FHA houses.
  • Conventional loans - These loans, from banks or mortgage brokers, are often sold on the secondary market and therefore need to be provably valuable.
  • Credit union loans - Because credit unions are using member funds to make loans, they often have more stringent requirements than conventional banks.
  • Hard-money loan - These are private financing loans for cash. The lender may want proof that the home is worth the purchase price.

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The purpose of loan contingencies

The entire purpose of a loan contingency is to delay the closing until certain criteria are met. In most cases, the lender will order an appraisal, and sometimes a second one before the loan funds. This is done to prove that the house is worth the purchase price.

There is a frequently used appraisal contingency. The buyer might have released this contingency, but if the lender is not satisfied, the loan contingency can be used to delay the closing until the appraisal is completed.

The downside of loan contingencies

The negative side of loan contingencies are that when the seller has multiple offers on the table, they might simply take the one that has no or fewer contingencies. They might even take a lower price to do this, but this way they can be assured of the sale.

Many buyers have begun asking the lender to get underwriter approval before the buyer even makes any offers. This removes the uncertainty of financing. No contingency is needed.

Should you avoid loan contingencies?

In many cases, it's best to have all the approval process completed before you even go out shopping. Other times, it's unavoidable. An FHA or VA loan may require that you take time to get a second appraisal.

To be certain that you know what will be expected, speak to your lender. If you know that any house will have a loan contingency on it, you won't get excited enough to simply pack up your belongings as soon as you see the right house.

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5 Myths And Half-Truths Homeowners Should Know

Life is full of myths and half-truths. Homeownership is no different. You'll often hear all kinds of advice about what to do and what not to do in your home.

Sometimes, this advice is simply no good.

Here are some of the most common myths and the truths you should know:

  • Light-emitting diode (LED) bulbs are not worth the cost - The price has dropped significantly since they first showed up. Furthermore, a LED bulb can save over $60 over the lifetime of the bulb which is about 10 years on average. While you might not see a drastic decrease in your electric bill right away, over time, you will save a great deal of money.

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  • Friends know great contractors - They might, but that doesn't mean you shouldn't do due diligence. Every contractor that works on your house needs to give you a state license number and an insurance policy number. You should check the state website to make sure the license is still active. You also need to contact the insurance company to make sure that the policy is in force. No amount of paperwork is perfect, but it will help to have those endorsements. You should also look online for reviews.
  • Grass is all you can put on your lawn - In some places, like Nevada, you might find it more economical and easier to simply adapt to the native environment. Grass might seem awesome, but in the desert, you're going to pay a lot of money to keep it alive in the heat of summer. Native plants can be wonderful and save a lot on water costs. You can also look for drought-resistant grasses. Another thing to look for is ground covers that don't need mowing like red clover. Consider where you are and make a "lawn" accordingly.
  • A kitchen upgrade will make my house more valuable - Not necessarily. Trends and wants for kitchens and bathrooms change every year. If you're going to remodel, do it for yourself, not for the home value. Look to "update" to classic styles that will be desirable in 10 years. If you simply want to update your kitchen a bit, throw up a new layer of paint. That will change the entire feel of the kitchen and cost less than $1500.
  • Turning off the heat or AC when you leave saves money - Nope. Here's why: If it's very cold or very hot, your heater or AC will need to work much harder to change the temperature. In colder climates, leaving the house without heat can lead to burst pipes as well. Leave the temperature at a nice steady level while you're out of the house and you'll save money on energy and a lot of wear and tear on your AC or heater.

These are only a few ideas that get passed down like old spouses tales. Unfortunately, they aren't true.

If someone gives you a piece of advice, verify that it's actually true before you let it into your house.

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Conventions, Sports, And Entertainment Growing In Las Vegas

Raiders Stadium, Las Vegas Ballpark, and MSG Sphere at the Venetian are adding almost 100,000 sports venue seats. Raiders Stadium will have 65,000 seats and the Las Vegas Ballpark will add 10,000 seats. The city will have a total of 339,000 venue seats within two years.

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Already, Las Vegas is one of the top entertainment destinations in the world, hosting many of the nation's largest conventions. A new convention center will only serve to increase the size and frequency of these conventions making the city the premier destination on the planet.

"If you're in the trade show business and you want to be in the big leagues you know that you need to take your trade show to Las Vegas and it's always been that way. No other city offers a comparable package of exciting amenities and facilities," said Chris Brown, executive vice president of conventions business operations of National Association of Broadcaster.

With the completion of the new convention center, Vegas will have over 14 million square feet of convention space. Already, one in six visitors come to the city for conventions. That number is likely to increase in the next five years.

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Keep Your House Looking Great

Even if you're not ready to sell, it's always nice to have a home that looks great.

Every spring, we head out into the yard and start to reclaim what winter has changed.

Here are a few ways to make your home look great, save some water, and have a house that's ready to resell at any time.

  • Mow on a schedule - If you have a lawn, don't mow it too short or let it grow too long. Either way, you take a chance at damaging the lawn. Too short and it can dry out easily. Too long and when you do cut it, it can be damaged by the sun and heat because the lower parts of the grass aren't meant to be exposed to the heat.
  • Water on a schedule - Be sure to check the Las Vegas Valley Water District's seasonal watering schedules. Set your irrigation system on a schedule that it waters at night. The water will have a chance to soak into the ground and feed the roots. If you're hand-watering, you should do it in the evening after the sun has set. No matter what you do, water regularly. Once the soil has gotten very dry, it will let the water run off rather than in. You'll be washing the gutters rather than watering your yard.
  • Control the pests now - Those little pests eat the roots and leaves of your grass and plants. If you control the pests now, it'll help prevent them from hatching eggs, causing more pests to grow and cause problems for your plants.
  • Get your lawn tools now - Father's Day usually has the lowest prices of the season for mowers, trimmers, and other lawn equipment. Shop around and compare prices. You can probably find the same equipment on sale in different places and take advantage of the large companies' low price guarantees.

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Even if you aren't selling your home right now, there's a decent chance you will in the next few years. A bit of maintenance now will save you from having problems later.

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Clark County Is Still Growing

Clark County gained 48,000 residents from 2017 to 2018. That makes it the second fastest-growing county in the country.

Clark County's growth was massive, but it was eclipsed by Maricopa County, Arizona, home to Phoenix, which gained 80,000 residents in the same period.

In the period from 2010 to 2018, Clark County is the nation's fourth fastest-growing county, adding 279,000 new souls. Much of Nevada's populous areas gained new residents as growth in the warmer parts of the country has increased over the past 8 years.

The US Census Bureau identified Nevada as the fastest-growing state in the nation from 2017 to 2018. The overall population growth was 2.09 percent or 62,000 people.

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2018 was a red-letter year for Nevada which passed the 3-million residents mark for the first time in history.

Nonetheless, among this growth, housing prices have not grown nearly as quickly. In fact, home prices in the Las Vegas area saw a couple of months of price shrinkage late in 2018. More recently, there has been a massive increase in the number of available homes for buyers coming to the Silver State.

All of this influx of population has also created a growth in the state's economy and strengthening of the business environment.

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Las Vegas To Draw New Residents Downtown

Fifty-five percent of all visitors to Las Vegas downtown area are millennials, according to a Las Vegas Convention and Visitors Authority (LVCVA) report released on April 9.

This is great news for city leadership that is seeking to bring life to the downtown area on a more permanent basis. The goal for Las Vegas, like most American cities, it to get this prized generation to move into and live in the downtown area.

Economic vitality requires two things for a downtown area to be strong enough to weather difficult economic times: an influx of outside cash and a vibrant population to sustain businesses.

"The pitch is that it's exciting to be on the ground floor of something," Bill Arent said. "Downtown living and the case to live Downtown is really something new. Up until recently, there really wasn't a reason to be Downtown, but I think we have that now with the entertainment, the arts district, being kind of the center of the Valley where you can get anywhere pretty quick. It's a good place to live." Arent, the city's economic and urban development department director, spoke to the Las Vegas Sun.

The population of downtown Las Vegas has been almost unchanged between 2014 and 2018. In fact, according to the city, the area has actually lost a few hundred residents.

One of the biggest draws for downtown residents in every city is access to culture and arts. While there is no set definition for what those things are, the cities that have successfully begun to revitalize their downtown districts have promoted the arts along with promoting housing.

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Part of the perception that needs to be overcome by most cities is that downtown areas are crowded, dirty, and crime-ridden. In fact, in many cases, the downtown areas have become safer and more vital than many of the suburbs.

Las Vegas has an immense amount of culture and arts in the downtown district. The "First Friday" events are always well attended. Many of the attendees from outside of the city, from places like Henderson and Summerlin.

The city sees its mission as being able to get those people to live in the downtown that they so enjoy visiting.

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North Las Vegas' Newest Approved Community

Las Vegas has been an innovative town since its inception, with architecture and culture unlike anywhere else in the world.

In mid-April, the North Las Vegas City Council started on the path to bring a new housing development to a vacant lot near the corner of Deer Springs Way and Losee Road. The new development, built on 85 acres, will include almost 1,200 homes with single-family homes, duplexes, four-plexes and six-plexes.

The entire community will be laid out as a walkable community with massive job creation district. The city's "job creation zone" is dedicated to bringing more medical jobs to an area dominated by the VA Medical Center. The zone was accepted by the city council from the federal government with the intention of making a job creation engine for North Las Vegas.

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"We're expecting this project to allow future businesses to see where their labor force is going to come from," Mayor John Lee said.

The total project will take three to five years to complete once the development firm, Touchstone Living, receives permits from the city.

The neighborhood will be a designed for young families and couples, an idea reminiscent of the housing booms of the 1950s that placed housing developments in and near economic districts. The intent, according to Dustin Manning, the vice president of Touchstone Living, is for the homes to be affordable for young couples and families, although no formal price range has been defined yet.

This new development will bring even more housing to the Las Vegas area that is beginning to see the establishment of several housing projects that will include developments throughout the region, most of which combine housing with job development and/or retail districts.

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Mortgage Applications Hit 9 Year High

Mortgage applications are on the rise with a 7% increase year over year. While weekly variations are normal, the overall trend is toward more mortgage applications and a robust buyers' market. This represents a 9-year high in mortgage applications indicating that the home selling and buying market is strong and getting stronger.

Rising mortgage rates appear to be having an effect on refinance applications. Even a quarter of a percent increase has a negative impact on the number of applications that are received, thus the number of mortgages that are worth refinancing.

This same interest increase is not putting a damper on home sales, however. In fact, applications were at their highest levels since April 2010.

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One arena causing instability and concern in the lending market is international economies which are slowing and struggling while the domestic market continues to grow in job numbers and GDP.

The prognosis for the spring buyers' market is strong with stable mortgage rates and large inventories in Las Vegas and around the country.

For home sellers, the market should remain favorable. Stable mortgage rates and large inventories should make finding the right home at the right price easier than in the past two years.

Home sellers might find that a bit more patience is required and that they might not get stunningly high prices, but they should make a decent profit on their homes. Prices will continue to rise, but bidding wars are less likely and will not push the sales price as far as it might have a year ago.

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Las Vegas Buyer Market Looking Good

A new report from the Greater Las Vegas Association of Realtors (GLVAR) points to a much better buyers' market in the Las Vegas area than previously expected.

The most significant change in the past year is the massive growth in available homes. By the end of March; 7,091 homes were on the market without offers. This was an 84.9 percent increase over the previous year.

The median home price continued to increase by 1.3 percent from February to $300,000. That's up 7.1 percent from the same time the previous year.

For home buyers, this means that there are more homes to choose from and a greater likelihood of finding a home that fits their needs and budget.

The majority of the available housing on the market is pre-owned, single family housing.

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Prior to this report, there was a sense that the spring selling season this year would be lean, with home prices increasing significantly. It was expected to be a sellers' market. This reversal should lead to a growth in sales.

Sales in March were up 33.3% over February, but down 16.8% from March 2018. With this change, the future for buyers might include lower prices or slowing in price increases, as well as continued large inventories to choose from.

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New Ultra-FICO Credit Score Is Coming

So you know your FICO credit score number? That's great, but brace yourself. The company that brought you the FICO credit system, Fair Isaac Corp., have developed a new credit scoring system that shows a more complete snapshot of your financial history.

It's due to be released any day.

Here's the least you need to know about the Ultra-FICO credit score:

  • It will include all of the borrowing activity that the FICO score looks at now.
  • Ultra-FICO looks at your checking/savings/money market account balances. This will give lenders a look at your banking habits. While there are no hard guidelines, Fair Isaac Corp. recommends that consumer maintain a balance of over $400 for three consecutive months in each account.
  • It also looks at recurring payments that you make for things like utilities, rent, etc. If you don't pay these bills through your checking or savings accounts, you will want to start. This shows a level of fiscal responsibility. Paying those bills with credit cards doesn't show the same level of responsibility.

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Along with your borrowing and repayment history, this will also show potential lenders what your level of personal responsibility is. For example, if you always pay your loan payments, but not your electric bill, you can hide that under the current FICO system. The Ultra-FICO score will show a more complete picture of your financial activity.

How will the new Ultra-FICO score help or hurt?

If you have a negative credit history or no credit history, your responsible banking activity will help to improve your credit score.

Of course, the opposite is true as well.

Most lenders won't rely on the Ultra-FICO immediately. They will use the FICO score to double check what the Ultra-FICO means to them. Nonetheless, it will likely be the credit score of the future, so planning ahead will save a lot of pain and hassle.

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