Nebraska Mortgage Rates

Living in Nebraska

Yes, some of Nebraska is flat and its economy is dominated by agriculture. But if you venture off Interstate 80, you’ll leave behind the corn fields of the Plains and find rolling dunes in the Nebraska Sandhills and canyons in the Niobrara River Valley. The state that’s home to Husker football and investing wizard Warren Buffett takes pride in resources visitors often bypass, such as nine scenic byways, family-friendly zoos and aquariums, and lively comedy and indie music scenes in Omaha.

Nebraska is sparsely populated, and about three-quarters of residents live in just one-quarter of the state. In 2008, growth in home prices began outpacing much of the U.S; and in the decade that followed, Nebraska saw the sixth highest average gains in home prices of any state. Home supply, meanwhile, dwindled; so much so that by the middle of 2018, Nebraska’s two largest cities — Omaha and Lincoln — both had less than a two-month supply of homes for sale (anything less than six months usually favors sellers).

Lately, the market in Omaha has let off some heat, with home supply up 6.7% from the previous year. As in the rest of Nebraska, high property taxes appear to be slowing sales in Omaha. Still, in April, 2019, the median home price in the Omaha metro area (which includes three counties in Iowa) was up 8% from a year earlier for existing homes and 2.7% for new homes, according to the Great Plains Regional Multiple Listing Service. Those increases mean the median price for an existing home in the area is now $190,000, and it is $317,558 for a new home.

Even in rural areas, sellers appear to be in the lead in Nebraska. According to the Kansas City Federal Reserve, the rise in Nebraska home prices has accelerated at all price ranges across the state since 2013, but the uptick has been even higher in non-metropolitan areas and in the least expensive third of the housing market. In that market, the median price for a home has risen 45%, compared to 30% for all homes.

The rules and costs of buying a home in Nebraska

With housing prices rising and supply tight, it can pay to understand the rules and costs associated with buying a home in the Cornhusker State. Here is a sum-up of what you need to know:

Home seller and buyer laws

In Nebraska, sellers have to complete a property disclosure form before selling a property. The disclosure asks for information about appliances, electrical systems, heating and cooling, the structural condition of the property, water systems, title conditions and more. Sellers have the option to put “Do Not Know” as a response to specific questions on the form.

Nebraska is a judicial foreclosure state. That means a lender can foreclose on a home only by going through the court system. If the lender wins the case, the home is sold to repay the delinquent debt. If the sale of the house doesn’t cover the debt owed, lenders may also sue for a so-called deficiency judgement to recover the balance.

Nebraska is an equitable distribution state that doesn’t recognize community property. That means the state views any asset (including property) acquired by one spouse as not necessarily belonging to the other spouse; and in the event of a divorce, both assets and debts do not need to be split equally. Instead, a court in Nebraska will typically try to ensure all marital property is distributed fairly, according to factors such as each spouse’s earnings.

Nebraska is also an escrow state. In many states, buyers are allowed to only use an attorney to close on a home. Nebraska law, however, allows closings to be handled by either an attorney or a title company working as an escrow agent, as long both buyer and seller confirm the arrangement in writing.

Taxes

When property changes hands, Nebraska charges a documentary stamp tax (often called a real estate transfer tax in other states). The tax covers the transfer of the property deed from one owner to another, and in Nebraska it costs $2.25 for every $1,000 of property. While buyers often pay transfer taxes in some states, Nebraska law requires sellers to pay the documentary tax. Once you’ve found a home to buy, your mortgage lender is responsible for letting you know the exact amount of tax that will need to be paid.

As in most states, property taxes in Nebraska vary by county, but the average tax rate is now 1.67% of a property’s assessed value. On average, a homeowner with a median-priced home in Nebraska ($142,400) will pay a little less than $200 per month or $2,378 per year in property taxes. The highest tax rate is in Douglas County, home to Omaha, where the average tax rate is 2.3%.

Nebraska, like many other states, has implemented caps for years to curb property tax growth, but the taxes remain a concern for many homeowners. The state does offer an exemption program for certain qualified individuals, such as those over 65 and those who are disabled, including disabled veterans or their surviving spouses. The program works by exempting from property taxes either all or a portion of the home’s assessed value; the exact amount depends on who is applying, income and the home’s value. To see if you qualify, check this state website.

Conforming loan limits

The conforming loan limit throughout Nebraska is now $484,350 for a single-family home, the same amount in most of the U.S. (Limits are higher in more costly areas and for multi-family properties.) Conforming loan limits are the maximum loan amounts allowed for the loans that two government-sponsored enterprises, Fannie Mae and Freddie Mac, are willing to buy and guarantee on the mortgage market. As a result, conforming loans are now the most common loans in the U.S. today. They also offer the best interest rates for buyers who have strong credit.

Programs for homebuyers in Nebraska

If you are a first-time homebuyer, you may be able to get financial help through one of the programs from the state-established Nebraska Investment Finance Authority (NIFA). Go to this NIFA website for more program details and this site for current interest rates.

Military Home Program

This program provides low-interest loans to active-duty military members and honorably discharged veterans.

Features:

  • 30-year, fixed-rate mortgages
  • No origination fees
  • No discount points
  • Compatible with VA, FHA or USDA Rural Development loans

Who qualifies:

  • Active-duty military members or veterans with discharge statuses other than dishonorable
  • Active-duty military members must be first-time homebuyers or have rented for the last three years; qualified veterans and their spouses are not required to be first-time homebuyers
  • Buyers much meet income limits, which vary by county ($74,900 to $97,920 for a one- or two-person family; the higher limit is for targeted areas in Douglas County)
  • Buyers must meet purchase price limits ($283,000 for a single-family home in most cases)
  • 640 minimum credit score

 

Homebuyer Assistance Program

Struggling to save for a down payment? If you can put at least $1,000 toward your home purchase, you may qualify for this Nebraska assistance program.

Features:

  • Offers two loans, a primary mortgage and a secondary mortgage
  • Primary mortgage is a 30-year, fixed-rate mortgage
  • Interest rate on the primary mortgage depends on market rates
  • Secondary mortgage is for up to 5% of the home’s value
  • Secondary mortgage has a 1% interest rate and is paid off over 10 years

Who qualifies:

  • First-time buyers, or those who have rented for at least the past three years
  • Buyers who earn less than income limits ($74,900-$97,200 for a one- or two-person family; higher limit is for targeted areas in Douglas County)
  • 640 minimum credit score
  • Buyer must meet purchase price limits ($283,000 for a single-family home in most areas)
  • Buyer must provide a down payment of at least $1,000 with own funds

 

First Home

First-time homebuyers who don’t need down payment assistance may qualify for the First Home Program, which is a subsidized loan program compatible with conventional, USDA and FHA loans. A similar program, First Home Targeted, is available for buyers looking for a home in an area specifically targeted for redevelopment by the federal government. (Income and purchase limits are higher for the targeted program.)

Features:

  • 30-year, fixed-rate mortgage
  • No origination fees
  • No discount points

Who qualifies:

  • Buyer must not have owned a home as a primary residence in the past three years
  • Buyer must meet income limits ($74,900 to $81,600 for a family of two)
  • Buyer must meet purchase price limits ($283,000 for a single-family home)
  • 640 minimum credit score

 

Rate shopping tips

When it comes to finding the best mortgage in Nebraska, it pays to shop around. Here are five steps to follow:

Collect as much documentation as you can before you shop.

Collect any necessary documentation before you shop. Many lenders will accept electronic copies of documents when they give you a rate quote. The more documentation you can send to a lender, the more accurate their quote will be. Must-haves include bank and credit card statements, tax records, W-2 forms and recent pay stubs.

Contact at least three lenders on the same day.

Interest rates change daily (sometimes more often), and rates often vary by the type of lender. Check in with a variety of lenders, such as small, local banks and credit unions, as well as large national lenders. As of this writing, interest rates on identical mortgages in Nebraska ranged from 4.125%-5.375%, according to the Consumer Financial Protection Bureau.

Give lenders the same information.

To help nail down the exact price for a mortgage, be sure to provide the exact same information. This includes the purchase price of your new home, the type of mortgage you’d like (fixed-rate versus adjustable-rate), loan terms (say, 15 years versus 30 years) and how much downpayment you can provide.

Add up all fees to confirm costs and compare.

By law, lenders are required to give you a loan estimate within three days of receiving your application. Your estimate will tell you the interest rate for your loan, your monthly payment and the fees that come with your mortgage. These fees typically include lender fees for processing and closing your loan, and possibly also the cost of points if you’re receiving them in exchange for a lower interest rate. Your estimate should also provide you with an annual percentage rate (APR), which is the total cost of the loan annualized over the borrowing period. The loan with the lowest APR is generally considered the lowest-cost loan. Still, you may need to balance a low APR with potential closing costs to see which loan might ultimately work best for you.

Lock in a rate.

As soon as your offer on a home is accepted, see if your lender is willing to lock in your interest rate so you don’t end up paying sizably more if market rates edge up before you close. Locking in a mortgage means the interest rate on the loan won’t rise for a fixed period of time, from 30 to 60 days in most cases. If you find an outstanding interest rate before you start shopping, see if your lender might be willing to lock it in then. You may be able to extend your rate if necessary; but extensions can be expensive, so ask your lender about potential fees and deposits.

The information in this article is accurate as of the date of publishing.