When you’re ready to buy that first home in the Cornhusker State, Nebraska has several financing programs and government-backed mortgage products to help make the dream come true. But first, a little research on Nebraska’s housing market is in order. Check your interest rates and credit scores, then get ready to house hunt. This guide can help.

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Check Mortgage Rates in Nebraska

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Nebraska lenders post their daily mortgage rates online, although a free quote is also available with a phone call. Knowing your credit scores in advance can help you prepare to apply for a mortgage, as well as gain a better understanding of the rate you’re likely to be offered. The formal rate quote from a Nebraska bank or mortgage company will factor credit scores, as well as the down payment the buyer is able to provide.

Any Nebraska resident can check their credit reports once a year at no cost from Experian, TransUnion and Equifax, which are the three main credit reporting agencies. If you need help disputing errors on a credit report or cleaning up your credit history, the US Department of Justice maintains a list of approved credit counseling agencies in Nebraska. Learn more about factors that drive mortgage rates.

2

First-Timer? Get Homebuying Help in Nebraska

USDA Rural Nebraska and the Nebraska Investment Finance Authority are good places for the first-time homebuyer to start researching a new home purchase. Both offer fixed-rate loans at favorable interest rates to new homeowners. There are income restrictions on eligibility for these lending programs, although for the first-time homebuyer in Nebraska the ceiling is in line with median income. A list of income limits by Nebraska county is available from the Investment Finance Authority. If you know where you want to buy, check the county first to determine if you might qualify for a government -backed loan.

The Nebraska housing market is strong and growing. Rising rent prices and an influx of millennials in the housing market have spurred home sales to five-year highs in Nebraska. Major cities are seeing the largest increase in sales. For instance, the number of homes sold in Omaha climbed seven percent from 2014 to 2015 and were up nearly 50 percent since 2010, according to the Omaha Area Board of Realtors. In practical terms, demand for housing is driving up home costs as well. The median price of a house in Omaha was $162,000 in July 2016, up from $156,000 a year earlier. There are signs that Nebraska developers are ramping up to meet housing demand, as new building permits in the Cornhusker State have climbed each year since 2010.

The Nebraska Real Estate Commission offers state-specific tips that house buyers can review before they start applying for a mortgage or working with a real estate agent. For instance, a contract between the home buyer and the agent is not required in Nebraska, although the commission says that agents are more likely to ramp up their efforts on the buyer’s behalf if a contract is in place.

Check out this MoneyGeek guide for an in-depth look at the homebuying process in general.

Financial Assistance in Nebraska for First-Time Buyers

Here’s a one-stop resource for locating first-time homebuyer financial assistance throughout the Cornhusker State.

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Find a Housing Counselor in Nebraska

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Understanding Home Affordability in Nebraska

Nebraska lenders, including government agencies that help first-time buyers, calculate how much of a mortgage the buyer can afford based on factors such as monthly income and personal assets. The ceiling on a mortgage payment as a percentage of monthly income varies among lenders as well as the individual circumstances of the buyer, but in general ranges from 28 percent to 33 percent. Additional help is available from Nebraska’s Affordable Housing Program, which offers assistance to first-time buyers as well as home owners in need of vital repairs.


How Nebraska Mortgage Rates and Home Prices Affect Monthly Payments

Metro Area Estimated Monthly Mortgage Payment* Q1 2016 (Change from Previous Year) 2015 Median Home Price 2014 2013
Lincoln $734 $156,100 (+3.90%) $156,800 $145,600 $143,300
Omaha $741 $157,700 (+6.50%) $159,100 $149,000 $145,700

Source: National Association of Realtors Q1 2016 Metropolitan Median Area Prices and Affordability report.
*Estimated Monthly Mortgage Payment is based on median home prices for the metro area in Q1 2016 and a 30-year fixed mortgage with today’s rates.

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Determine How Much You Can Borrow in Nebraska

FHA loan limits vary by Nebraska county, although the maximum is about $271,000. Conventional loans have a $417,000 ceiling at present. These limits are important to know because they give first-time buyers a sense of how much house they will likely be able to buy in Nebraska, and this helps focus on the best choices when seeing properties with a realtor. Here is a breakdown of lending limits throughout Nebraska:

Clear selections
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Buying a Home in Nebraska: Tips from the Experts

Gary Rumbaugh

Gary Rumbaugh is a housing construction manager for NeighborWorks Lincoln.

Jacki Young

Jacki Young is a single family program manager at the Nebraska Investment Finance Authority.

What’s the biggest issue first-timers overlook when they’re ready to buy a house in Nebraska?

Rumbaugh

Lack of money on hand. We require clients to have $1,000 to bring to the table at closing, but in reality they’ll need more than that. People seem to not have adequate savings. And credit scores. We have people in Lincoln who want to buy, but they get an unpleasant surprise when they check their credit scores and realize it might be a year or more before they can improve them enough to get approved for a home loan.

Young

Coming up with the funds to cover down payments and closing costs has always been a barrier and that’s where our agency comes into play with our Homebuyer Assistance Program. The borrower has to invest at least $1,000 of their own funds. The other issue we see a lot is their lack of knowledge about the homebuying process in general. There’s a lot involved and that can be daunting. So we require homebuyer education on every single loan. We partner with 16 non-profits located throughout Nebraska who provide home buying education. We also refer people to online education classes, which are an option to going in person.

What’s the best way to repair damaged credit so a new homebuyer can qualify for a mortgage?

Rumbaugh

One good way is to buy a prepaid credit card and use it for groceries, prescriptions, things you would normally buy. And that shows up on your credit scores that you’re paying it off. The debt doesn’t get too big, because you’re just buying normal things. The whole idea is to pay it off every month and not carry a balance so this history off repayment is reflected in your credit reports.

Young

Start going over your credit reports at least six months and in some cases 12 months. Many homebuyers don’t even have a credit score. Paying down your debt is a big one. The Nebraska Housing Developers Association has REACH Affiliates that offer credit counseling. Many times these classes are free or there’s a minimal charge.

What’s the single greatest obstacle to home ownership in Nebraska?

Rumbaugh

If I were a first-time homebuyer I wouldn’t buy in Lincoln right now. It’s a sellers’ market and prices are inflated. Usually we’ll have anywhere from 1,000 to 1200 homes on the market, but there’s fewer than 600 right now. The people we work with are looking at homes in the $80,000 to $130,000 range and those are hard to find in good condition. I’ve walked away from quite a few homes for issues like a bad foundation. At NeighborWorks our mission is our clients will not face any major issues in the first five years and a lot of properties I look at are not going to meet that goal. This has been a problem for about the last year and a half and I don’t see it loosening soon. At these prices, I don’t know they can keep going up.

Young

We absolutely have a shortage of affordable housing, which is in the $75,000 to $150,000 price range. We have some affordable builders who are active in our program but they are building mainly in more urban areas like Omaha and Lincoln. It’s the rural areas where we really need more affordable housing.

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Don’t Forget Nebraska Closing Costs

Nebraska ranks roughly in the middle of all U.S. states for mortgage closing costs. The graphic below provides a rundown on the average fees you might expect in the Cornhusker State. Examples of closing costs in Nebraska include lender origination fees, legal services, home inspections and appraisals – even survey work. More information on how lenders set closing costs and what you can expect can also be found here.

Average Closing Costs in Nebraska

Average Origination
Fees
$1,047
Average Third-Party
Fees
$770
Average Total Closing
Costs
$1,817

Source: Bankrate’s 2015 survey of closing costs.

Refinancing a Mortgage in Nebraska

The Nebraska Department of Banking and Finance helps homeowners interested in refinancing their house, either to take advantage of lower interest rates and reduce monthly mortgage payments, or to pull out equity in the property for other needs such as repairs and home improvements. Refinancing is also the first strategy to consider, the department says, if debts become unmanageable and there might be risk of foreclosure on your Nebraska house.

Interest rates are expected to remain low through at least the end of the year, as the Federal Reserve may be reluctant to raise rates following international economic turmoil such as the UK’s Brexit vote to leave the European Union in 2016. This bodes well for Nebraska homeowners looking to refinance. This MoneyGeek guide offers comprehensive general information on the refinancing process.

Other Nebraska Mortgage Resources

Nebraska Investment Finance Authority

Offering loans at favorable interest rates to first-time home owners.

Nebraska HUD

Federal programs to help Nebraska residents purchase a home.

Nebraska First-Time Homebuyers

Resource for various loan programs and real estate market news in Nebraska.

Home Ownership in Lincoln, Nebraska

Funding resources for residents of this Nebraska city who plan to buy a house.

NeighborWorks Home Ownership Program

Offering homebuyer education and loan assistance for down payments.

Nebraska Real Estate Commission

Consumer information and resources on buying and selling a house.

Consumer Guide to Buying or Selling a House in Nebraska

Detailed information specific to Nebraska law on real estate transactions, the role and responsibility of a real estate agent, plus financing resources.

Nebraska Department of Economic Development

Home ownership programs available through the department to Nebraska residents.

Nebraska Affordable Housing Trust Fund

Application information and forms for low-income individuals seeking to buy a house.