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.
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.