How to Buy a House in Nebraska: A Homebuyer’s Guide

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Edited byAshley Jacobs

Updated: March 31, 2023

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The median home price in Nebraska is roughly $250,043, which represents a year-over-year increase of 10.2%. Home prices in the state have increased steadily over recent years, with greater growth seen starting in 2020. Despite this overall trend, this median home price and year-over-year percent growth are still lower compared to the national average of roughly $357,589 and 13.5%, respectively.

If you’re planning to buy a home in Nebraska, you’re in luck because it ranks highly in terms of housing affordability.

MoneyGeek walks you through the steps you need to take when purchasing a home in Nebraska so you can avoid crippling debt.

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Choose an Ideal Location

Location is one of the key determinants of home prices in Nebraska. However, aside from cost, there are also other factors to consider when selecting a location, such as cost of living, neighborhood culture and access to amenities, especially hospitals and schools.

It is important that you weigh all these aspects against your needs when deciding the best place to buy a house in Nebraska.

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WORK WITH A REAL ESTATE AGENT

A real estate agent can make the homebuying process faster and more convenient. Your agent will present you with a selection of homes within your budget and in your preferred areas, allowing you to narrow down your choices significantly in less time. Your agent will also schedule viewings and negotiate with the seller on your behalf.

MoneyGeek suggests the following when looking for a real estate agent:

  • Do your research and compare agents based on information that you can easily find online.
  • Ask for referrals.
  • Check the agent’s license, training and experience.
  • Ask the right questions to make sure that the agent has in-depth knowledge of the local housing market.
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CALCULATE THE COST OF LIVING

If cost is one of your top considerations in choosing where to live, the cost of living can help you narrow down your choices. This is because the cost of goods and services in the state can vary greatly depending on which city or county your home is located in.

Having an idea of the cost of living will help you determine whether you have enough income to cover basic necessities, such as:

  • Food and groceries
  • Utilities (water, electricity)
  • Healthcare
  • Education and childcare
  • Income taxes
  • Property taxes
  • Public transportation expenses
  • Medical insurance premiums
  • Car insurance premiums
  • Entertainment and leisure

MoneyGeek’s cost of living calculator will show you how much average monthly expenses for a typical family varies in different cities across Nebraska.

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CONSIDER AFFORDABLE NEIGHBORHOODS

It is relatively cheap to live in Nebraska. On top of affordable housing prices, the cost of living is also lower compared to much of the country.

According to the latest data, these are the most affordable areas to live in across the state:

  • Kearney
  • Scottsbluff
  • Beatrice
  • Norfolk
  • Fremont
  • Grand Island
  • South Sioux City
  • North Platte
  • Hastings
  • Lexington

The main advantage of living in these cheaper areas is the amount of money that you’ll save on your mortgage and on everyday essentials. However, you might find that the nearest school or hospital is a significant drive from your home.

Calculate Mortgage Rates

Your lender will typically look at your income, credit score and debt-to-income ratio when evaluating the types of mortgages and rates that you’re eligible for.

Depending on your credit profile and personal circumstances, you might qualify for several different mortgage loan options in Nebraska. Rates tend to vary, so make sure to get the best possible rates by shopping around and comparing lenders as well as their mortgage offerings.

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SEE YOUR MORTGAGE OPTIONS

Different mortgage types have different rates. In Nebraska, the average interest rates for various 30-year mortgage types are:

Note that these average APR rates can still vary depending on your lender and the exact location of the property.

Also, some loans are limited to borrowers who meet specific requirements. For instance, federal loans such as VA home loans have lower interest rates and don’t require a down payment, but you need to have a military background.

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USE A MORTGAGE CALCULATOR

MoneyGeek’s mortgage calculator can help you understand the costs associated with your mortgage. Use this free online tool for a quick and personalized estimate of your monthly payments. Also, check our FHA vs. conventional loan calculator to compare rates at a glance.

When buying a home, it is important to make sure that you can afford the monthly payments. Knowing this beforehand will keep you from missing payments and defaulting.

Depending on your personal and credit profile, you might be eligible for a government-backed mortgage, a conventional home loan or both. Check the loan types that you qualify for and compare APRs to find the most affordable option for you.

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KNOW YOUR QUALIFICATIONS

Before applying for a loan, it’s important to understand your qualifications. Keep in mind that lenders will evaluate your:

  • Credit score: Homebuyers with good credit typically receive higher loan amounts and APRs and terms.
  • Credit history: Lenders will conduct a hard pull of your credit report to check your credit history, keeping an eye out for any missed payments and loan defaults.
  • Income: Depending on the lender, there might be income requirements that you must meet for certain mortgages.
  • Debt-to-income ratio (DTI): Lenders will look at how much debt you currently are paying off to check whether your income is still enough to cover another loan.
  • Down payment: Paying a higher down payment might help you get better APRs that can make monthly payments much cheaper.

Prepare Down Payment Requirements

Although putting a 20% down payment on a house is ideal and can give you more attractive rates, there are options for lower down payments that make homeownership affordable to more individuals.

There are also federal housing loans that don’t require any upfront payment, such as USDA and VA home loans.

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DETERMINE DOWN PAYMENT REQUIREMENTS

A down payment is one of the biggest upfront costs that you’ll face as a homebuyer. Depending on the mortgage, your down payment could be as high as 20%.

There are also government-backed zero-down-payment options, but you need to meet the eligibility requirements. For example, a USDA home loan will require you to purchase a home in an eligible rural area with a total population of under 35,000 people.

If you can afford it, consider paying a larger upfront down payment to get lower interest rates and cheaper monthly payments.

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CALCULATE MORTGAGE INSURANCE

Be prepared to pay mortgage insurance, especially if you cannot pay a 20% down payment upfront. Private mortgage insurance (PMI) serves as a lender’s protection against the risk of having a borrower who defaults on the loan.

Depending on your mortgage, PMI may or may not be required:

  • Conventional loan: This requires PMI if a homebuyer has a down payment of less than 20%. Keep in mind that rates will tend to vary depending on the borrower’s credit score and size of the down payment.
  • VA loan: Doesn’t require PMI.
  • USDA loan: Doesn’t require PMI
  • FHA loan: Doesn’t require PMI, but you might be asked to pay a mortgage insurance premium (MIP), which is cheaper.
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DOWN PAYMENT ASSISTANCE PROGRAMS

Homebuyers who have not purchased a home in the past three consecutive years might qualify for a first-time homebuyer financial assistance program in Nebraska. This can help you settle both the down payment and closing costs.

In Nebraska, you can take advantage of the Homebuyer Assistance Program. Available through the Nebraska Investment Finance Authority, this program helps qualifying applicants with their down payment.

Get Pre-Approved for a Mortgage

It’s important to get pre-approved for a mortgage when buying a home in Nebraska. However, don’t confuse a mortgage pre-approval with a prequalification.

A pre-approval shows that a lender has agreed to commit to giving you a mortgage at a given loan amount. In contrast, a prequalification only serves to prove that you meet the eligibility requirements for a mortgage loan, but it doesn’t necessarily mean that the lender has committed to giving you a loan.

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GATHER NECESSARY DOCUMENTS

Alongside your completed loan application form, you’ll also be required to submit some necessary documents to facilitate the processing of your mortgage application. Most lenders will require you to provide these to verify your personal and financial information.

It's best to prepare these documents beforehand:

  • Social Security number
  • Driver's license
  • Bank account statements
  • Current pay stubs
  • Three years of tax returns with W-2s
  • List of credit accounts and existing debts

You may also be asked to submit additional documents depending on your situation and the type of mortgage that you’re applying for.

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TIME YOUR PRE-APPROVAL

A mortgage pre-approval is necessary when buying a home in Nebraska. This process can take up to 10 days, depending on the lender.

Your pre-approval letter will state the loan amount that you are qualified to borrow. Generally, this document is only valid for up to 90 days. This means that you should make sure you are ready to buy a home before applying for mortgage pre-approval.

If you fail to act quickly, you’ll need to reapply for another mortgage pre-approval once your letter’s validity period has lapsed.

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RECEIVE PRE-APPROVAL LETTER

After they receive your mortgage application, your lender will review the submitted documents and conduct a credit check to evaluate your eligibility. If you’re found to satisfactorily meet the requirements, your lender will issue a pre-approval letter stating its commitment to grant you a loan at a specified amount.

Getting pre-approval letters from multiple lenders will let you compare rates. Note that the validity of these letters varies by lender. But, generally, they last from 30 to 90 days.

Keep in mind that there’s a serious drawback to this strategy. Since lenders conduct hard credit inquiries, applying for several mortgage pre-approvals can have a negative impact on your credit score.

Conduct a Home Inspection

Always let a qualified professional conduct a home inspection before buying any property. A licensed inspector can help detect any issues that may require a substantial amount of repairs and expenses, such as structural damages or other safety issues.

As a homebuyer in Nebraska, you can use damages to negotiate a lower price. There are also lenders who will not grant you a loan without having a home inspection done by a licensed professional.

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CONTACT A LICENSED INSPECTOR

Make sure that the home inspector that you’re hiring is licensed in Nebraska. Working with a licensed and reputable professional will give you peace of mind that you’ll get reliable and accurate information about the home’s overall state. This includes any structural damages or other safety issues that you should know about before purchasing the property.

Having an inspection look done by a trained eye (at a cost of only $300-$450) will also spare you from facing unexpected costly repairs down the line.

Your home inspector will perform checks for any damages, construction flaws and safety issues with the following:

  • Foundation
  • Electrical system
  • Plumbing system
  • HVAC system
  • Roofing
  • Doors and windows
  • Appliances
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FOLLOW NEBRASKA-SPECIFIC INSPECTIONS

In Nebraska, home sellers are required by state law to disclose any faults and issues in their property to buyers. However, you must still perform your own inspection of the property using the services of a licensed inspector. A professional home inspector will give you a full and comprehensive assessment of all areas in the home. This critical step shouldn’t be overlooked since it can save you from the money trap of shouldering costly repairs for structural flaws and safety hazards.

There are also certain inspection laws that are specific to different localities, which is why it’s best to transact with licensed home inspectors and real estate agents who have in-depth knowledge of local regulations.

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GO THROUGH APPRAISAL

Your mortgage lender in Nebraska will typically hire a professional appraiser to perform an appraisal to determine the property’s value before giving you your loan.

This step ensures that the home’s listing price is not vastly different from its actual value, which prevents homebuyers from overborrowing. By doing this, lenders minimize the risk if a borrower defaults on the loan.

In addition to inspecting the home’s physical features, the appraisal will also account for current trends in the real estate market. This means that the value of the home will be influenced by current mortgage rates and the value of similar properties within the area.

Close Your Mortgage Loan

Once the home inspection and appraisal have shown satisfactory results, you’ll receive a loan offer from your mortgage lender. Review the offer before proceeding to close the mortgage loan.

This process will also require you to pay closing costs. Thankfully, there are financial assistance programs in Nebraska that can help cover this expense.

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SIGN ALL DOCUMENTS

During the closing process, be sure to carefully review the following documents before signing:

  • Property deed: This contains necessary information about the property and states ownership transfer to the buyer.
  • Mortgage note: This document states the loan amount, interest rate and repayment terms. It also legally binds the borrower to pay the monthly amortization.
  • Loan application: Confirm that your personal and financial details in the final mortgage application are correct.
  • Closing disclosure: This details the terms of your mortgage. Your lender will provide you with this document at least three days in advance before closing your mortgage in accordance with federal law.
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PAY CLOSING COSTS

Closing costs typically range from 2% to 5% of the home’s purchase price. However, costs will vary depending on your lender, the location of the property and other factors.

These are some of the fees included in the computation of closing costs:

  • Lender fees: These include costs for home inspections and appraisals.
  • Origination fee: Your lender may charge an origination fee which is deducted from the loan amount. Note that not all lenders charge this fee.
  • Escrow: This includes payments for mortgage insurance, property tax, homeowners insurance and any annual fees.
  • Third-party fees: These include legal fees, home inspection fees and other expenses, depending on your situation.
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COMPLETE YOUR HOME PURCHASE

There are some serious money traps during the homebuying process that you need to watch out for. That is why MoneyGeek created this step-by-step guide. Our expert advice contains detailed information about the essential steps, from selecting the best place to buy a home in Nebraska all the way through to finalizing your home purchase. Don’t forget to also consult with your realtor for additional advice, especially as regards local regulations.

A mortgage requires regular monthly payments, so make sure to keep tabs on when payments are due. Signing up for automatic payments may help simplify the repayment process and prevent the possibility of missed payments.

Nebraska Homebuying Details

As a homebuyer in Nebraska, there are several details that are unique to the state that you need to be aware of. For example, the median home prices and cost of living in the state tend to be lower compared to the national average, which makes Nebraska a good choice for those who consider affordability as a key determinant in choosing a location.

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Home prices and the overall cost of living in Nebraska can vary depending on the municipality. Homes that are located in the suburbs are generally cheaper but be prepared to sacrifice your access to amenities like schools, hospitals, malls and recreational centers in exchange for the lower costs.

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If you haven’t saved enough to cover a 20% down payment, check if you qualify for government-backed home loans and conventional loans that have lower down payment requirements.

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We also recommend that you explore the available financial assistance programs in Nebraska, such as the Homebuyer Assistance Program, that can help you with your down payment.

Frequently Asked Questions About Buying a Home in Nebraska

To give you more information about buying a home in Nebraska, MoneyGeek answered some of the most frequently asked questions people have about the process.

You must ask yourself these questions before deciding to purchase a home in Nebraska:

  • Where is the ideal location of your home?
  • What mortgage loan type and APRs will you qualify for based on your personal and financial profile?
  • How much can you afford to put in as a down payment?

Purchasing a home in Nebraska can be a good idea if you want to take advantage of affordable housing and the low cost of living in the state.

Over recent years, the median home prices in Nebraska have grown steadily. As a homeowner, you’ll stand to benefit from this increase in property value if this trend continues.

This mainly depends on the requirements set by the lender as well as the price of the property that you intend to buy. Some lenders do not have an income requirement, but others will look at your income and credit profile to evaluate your creditworthiness. Your income must be deemed sufficient to meet the monthly mortgage payments.

The property tax rate in Nebraska varies by city.

Lexington, Nebraska, ranks highly as an affordable area to buy a home in.

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