One way that people can afford the homes at Turnberry, Trump, Vdara, The Martin and off the strip in areas such as Southern Highlands, Red Rock Country Club, Aliante and many others is to pay cash. Paying cash is the easiest and least time-consuming way to purchase a home in the valley. Many times, closing on a home or high rise can happen in as little as 10-15 days if paying in cash. One thing to keep in mind is that in Las Vegas many had seen huge discounts for people paying cash. While discounts for cash buyers are still common, they are not as great as they once were. Many sellers (including luxury sellers) want fair market value for their homes. Many are willing to wait a little longer for the right buyer with the right offer.
Not everyone can afford to buy a home in cash. In a market such as Las Vegas that has seen the highest of highs and the lowest of lows, where our current market is on a slight rise, financing is highly important. A good rule of thumb on what you can afford when determining a home price is to multiply your annual gross income by three. If we do that to the $52,800 average household income in Nevada that would mean most people could afford a home priced at or below $158,400. This assumption is pretty consistent with the average price of owner-occupied homes. For those of us looking to finance homes, it is important to remember what most lenders will need to maximize our opportunity at being pre-qualified for a home mortgage loan.
- Gather all appropriate documentation. I typically advise my clients to remember the magic number of two. Most lenders will require the last two years' tax returns, last two months' bank statements and the last two paycheck stubs to start out. Many lenders will also ask for additional information unique to your own situation. Some people have past bankruptcies, litigations, trust funds, child support, alimony, etc that will also impact your available income and must be shared with the lender to determine what price point a client may qualify for.
- Be honest. I always let me clients know that your information is confidential. Regardless of the lender or real estate sales agent you choose, your personal informational is confidential and is protected by law. If there is something that is relevant to your financial reality, it must be shared with your lender. If you can only afford $600 a month, do tell your lender so that he or she can determine what is realistic and comfortable for you.
- Leave your credit alone. Some people think that paying off and closing credit cards will help them, but in reality many times this hurts a client. A closed credit card may have been one that the client had a long-standing positive relationship with that would demonstrate that the client is credit-worthy. I always tell clients, if it involves your social security number, do not do it without consulting with your lender first! I also let clients know that any changes in behavior such as unexpected cash deposits, paying off all your credit cards, or any new credit needs be discussed with your lender BEFORE you do it. Failure to do so, could result in being denied for a loan.
- Be realistic. Remember the $600 a month mortgage mentioned above? Those mortgages are out there when the amount financed is low. You will not find a $400,000 home for $600 a month unless you can bring in over $300,000 in cash for your down payment. It is okay to recognize that you may not be ready to buy a home and that waiting or starting small is ideal for you. A good agent will always understand and will be supportive of your long term goals. Do not feel obligated to move forward with a transaction that you cannot afford.
