Buying

Nobody has a crystal ball. There is no way to know if you are at the top or the bottom of the market. My advice to clients is this: Time in the market beats timing the market. Always do what makes sense for you financially. If you wait until a crash you may not have a job or the capital available to capitalize on the real estate market. You may also be waiting for years while you could have been building equity.

The average consumer will stay in their house for several years and in doing so they build equity. When a homeowner looks to sell, they will likely get money back. When you are renting and your lease ends, you will be lucky to get your security deposit back. 100% of monthly payments for rentals are gone whereas with a mortgage you build equity. As time goes on, you pay less on interest allowing more equity to be built.

Categories: Buying, Selling

Home Inspection

We always recommend paying for an inspection of a property. The price will vary depending on the size of the house but is usually between 300-500 dollars depending on the inspection company.

Follow-up or Additional Inspections

If something is determined to be wrong or needs to be inspected by a specialist, you will be responsible for paying these fees. These can include HVAC contractors, structural engineers, plumbers, electricians, and pest inspectors, just to name a few. Remember, you are paying them to determine the seriousness of a problem and get a quote. Once the problem is determined, you can add it to the request for repairs and the seller can then decide to fix the problem, offer a credit to you in lieu of fixing the problem, or dig their heels in and say they won’t do either.

Some buyers request having additional inspections to put their mind at ease. Keep in mind that any and all inspections must be completed during the due diligence period in order to protect your earnest money deposit.

Appraisal

Every time you get a loan for a home, an appraisal must be ordered by the lender. This allows the lender to determine that the property is worth equal to or more than what you are paying for it. This protects the lender’s investment and lowers their risk. An appraisal is always ordered through the lender. You can expect to pay several hundred dollars for an appraisal. To determine the exact amount, you can ask your lender during the prequalifying process.

Category: Buying

A homestead protects you and your assets from creditors. You can access the homestead form and further info at the Clark County Assessor Web Page. Many times, homestead forms will be sent in the mail, offering to file a homestead for you for a fee. You can save money and pay a much smaller fee by filling out the form and dropping it off or mailing the notarized original copy to the County Recorder’s Office at:

500 S. Grand Central Pkwy. 2nd Floor, Box 551510, Las Vegas, NV, 89155-1510

WHAT THE LAW PROVIDES:

When you record a Declaration of Homestead, Nevada law protects the equity in your home up to $550,000 from general creditor claims (unpaid medical bills, bankruptcy, charge card debts, business/personal loans, accidents) but would not preclude a seizure or forced sale of your residence from general creditors if your equity exceeds the $550,000.  A creditor may file suit and can record a judgment lien against any real property you own.  Recording a Declaration of Homestead protects your principal residence up to the statutory maximum.  For example, if the value of your home is $645,000 and you have a first mortgage of $485,000 plus a second mortgage of $10,000, the equity is $150,000.

WHAT IS NOT PROTECTED:

The Homestead law does not protect you against debts secured by a mortgage or deed of trust, payment of taxes, IRS lien, mechanic’s lien, child support or alimony payments.

Category: Buying

Contact your Realtor before anything. They will help guide you through the process. Your first step will be to get in contact with a lender. You can choose your own lender (a bank, credit union, private lender, etc.) or you can ask your Realtor for referrals. Keep in mind, Realtors and lenders are two separate business entities in the process that come together to work for you.

Category: Buying

Down Payment

A down payment percentage can be determined by talking with your lender. It can be as low as 3% depending on credit scores and the lender. However, keep in mind that private mortgage insurance (PMI) is required until you reach 20% equity on home. Many people will put 20% down on a home to avoide PMI as it raises your monthly payment.

The median home price has fluctuated just above 300,000 dollars in recent history.

3% of 300,000 = 9,000

20% of 300,00 = 60,000

As you can see, the down payment amount can be significantly different. Figuring out what is affordable for you is the most important step in determining what you purchase.

Home Inspection

Highly recommended, a home inspection is usually between 300-500 dollars depending on the size of the home and the inspection company.

Appraisal

If you have a loan, you must have an appraisal. The appraisal is ordered through the lender you are using. For specific costs, check with the lender during the pre-qualifying process. Expect to pay several hundred dollars.

Closing Costs

Closing costs are usually the thing that first time home buyers are the least aware of when approaching the home buying process. Closing costs are generally around 3% of the price of the property but can be as high as 5%.

3% of 300,000 = 9,000

5% of 300,000= 15,000

Closing costs can be but do not have to be completely paid by the buyer. Sometimes not at all. In a seller’s market, it is common for the buyer to pay all the closing costs. In a buyer’s market, sellers will make concessions and may cover part of or all the closing costs.

Many things factor into negotiating for closing costs including: time the property has been on the market, how motivated the seller is to sell, the purchase price being offered by the buyer. Closing costs are negotiated at the beginning of the purchase process in the initial offer and subsequent counter-offers. Unless there is due cause, asking for closing costs after the fact is not advised and will more than likely cause a deal to fall through or at the very least create ill-will with the seller that could impact later negotiations.

A common practice to secure closing costs is to pay above the list price of the property and while simultaneously asking for closing costs. This allows the buyer to “build in” the closing costs to the loan. Beware though, if the house appraises below what you are offering, the deal will need to be renegotiated and closing costs are usually one of the first things to go.

Category: Buying

Selling

Nobody has a crystal ball. There is no way to know if you are at the top or the bottom of the market. My advice to clients is this: Time in the market beats timing the market. Always do what makes sense for you financially. If you wait until a crash you may not have a job or the capital available to capitalize on the real estate market. You may also be waiting for years while you could have been building equity.

The average consumer will stay in their house for several years and in doing so they build equity. When a homeowner looks to sell, they will likely get money back. When you are renting and your lease ends, you will be lucky to get your security deposit back. 100% of monthly payments for rentals are gone whereas with a mortgage you build equity. As time goes on, you pay less on interest allowing more equity to be built.

Categories: Buying, Selling

Real Estate Terms

If the property is a new unit in a common-interest community or a condominium hotel, or if the community is subject to any developmental rights, or contains converted buildings or contains units which may be in a time share, or is registered with the Securities and Exchange Commission, the buyer must also be provided with a Public Offering Statement disclosing applicable information, including:

  • development rights of contractors
  • construction schedule
  • description of proposed improvements
  • mechanical & electrical installations
  • initial or special fees
  • number & identity of units in timeshare

Unless the buyer has personally inspected the unit, the buyer may cancel the contract to purchase, by written notice, until midnight of the fifth calendar day following the date of execution of the contract. This provision must be stated in the contract.

A showing before closing or escrow that permits the buyers one final tour of the property they are purchasing to confirm it is still in the same condition at the time of purchase and to verify that agreed-upon repairs are completed.

The Internal Revenue form requesting taxpayer identification number and certification.

The Internal Revenue form issued by employer to employee to reflect compensation and deductions to compensation.

A guarantee on a mortgage amount backed by the U.S. Department of Veterans Affairs.

A VA loan is a loan guaranteed by the government (Department of Veteran Affairs) and available to the military, active and retired, and even for some eligible spouses, at low-to-no-down payment scenarios with competitive rates and fees.

U.S. Department of Veterans Affairs.

A trust sale means that the home is being sold by a trustee of a living trust – and not a private party. More often than not this is because the original homeowner has passed away, or has placed their assets in a living trust.

The trustee may not be as emotionally attached to the property as a traditional owner, which could translate to them accepting a less attractive offer as the trustee may prefer to offload the property.

Transfer tax is a transaction fee charged upon the transfer of a property’s title. It is imposed by the state, county, and municipal authority where the transaction is taking place and is based on the property’s value and classification.

Typically, the seller is responsible for paying real estate transfer tax, unless otherwise agreed upon during the transaction.

A fixed amount in addition to commission charged.

Termites are small, pale, soft-bodied insects that feed on wood, and can be highly destructive. The WDI (wood-destroying insect) report, also known as the Termite Report, includes a diagram of the property and the location of active and/or previous WDI activity.

The report can also and sometimes include what may be necessary to resolve such possible infestations such as spraying or tenting. The WDI report will rarely if ever include the cost for such items, as that may be considered a conflict of interest.

A VA loan requires a termite report to be paid by the seller.

Tenancy in common describes a type of joint ownership of a property, whether a single family property or a commercial building. The tenants in common all own the property, but in different ratios.

Depending on the property type will determine the ease or difficulty in securing financing. Also to note, tenants in common do not have the right to survivorship (the surviving owners do not get to split up the deceased tenant’s property interest), and instead, the deceased tenant’s ownership interest/percentage actually falls to their own estate, as defined by their will or the governing law.

Subject to inspection, or “submit offers subject to inspection”, means that the seller is not allowing the property to be viewed without an accepted offer. Some common reasons for this are privacy concerns of the occupants or uncooperative tenants.

The thought of buying a property sight unseen can be daunting for the traditional buyer, which can be used to your advantage as this will inevitably drive overall interest down.

It’s also not as bad as it seems as, under the standard purchase contract, you will have an inspection period, during which you can cancel the sale with no penalty.

A special and additional charge to a unit in a condominium or cooperative. Also a special real estate tax for improvements that benefit a property.

In a short sale, the property is being sold for less than the debt secured by the property. Short sales will require the approval of the seller’s lender(s) as the proceeds of the sale will be just “short” of the amount owed; most lenders’ processes of approving short sales are long and drawn out, requiring more time to close than a traditional sale.

Sellers may offer concessions to incentivize buyers to purchase the home, or sweeten the deal.

Concessions are most readily seen as a contribution towards the buyer’s closing costs, up to certain limitations and approvals by a buyer’s lender, which ultimately leaves more money in a buyer’s pocket when all is said and done.

Concessions are usually based upon what the market is. In a seller’s market, expect fewer or no concessions.

An institutional investment market that purchases mortgages from mortgage lenders.

Rent-back, or leaseback, refers to an arrangement whereby the buyer, who is now the new homeowner, agrees to allow the seller, the now-tenant, to stay in the house beyond the close of escrow. The terms are negotiated prior to the situation occurring and will often involve a lease deposit, a daily rental rate, and a length of time allowable.

The rate can sometimes be determined by looking at the new homeowner’s monthly out-of-pocket for the mortgage as well as the possible inconvenience this may cause them in delaying their own move, all factoring into a daily rate.

A written document stating that a seller or buyer has satisfied his or her obligation on a debt. This document is usually recorded.

Refinancing is when you restructure your home loan, replacing your old loan with an entirely new loan that has different rates and payment structures. The main reason people refinance their home loans is to get a lower interest rate on their mortgage, and therefore lower not only the monthly payment but also the overall debt owed.

You can also refinance your loan to get rid of Private Mortgage Insurance (PMI).

An actively licensed real estate agent and REALTOR® are often used interchangeably, although not every real estate agent is a REALTOR®. A REALTOR® is a member of the National Association of REALTORS® (NAR).

A REALTOR® promises to uphold the Code of Ethics of the association and to hold each other accountable for when serving the public, customers, clients and each other, with a high standard of practice and care.

Real-estate owned is a designation given to properties which are owned by a lender due to an unsuccessful foreclosure sale at auction.

REO properties can sometimes present an opportunity for a buyer to be purchased for below market value as most banks would prefer to reinvest the proceeds, rather than waste time marketing the property for an extended period.

Additionally, the bank will often market the property “as-is” meaning they are unwilling to make any repairs to the property, which can make financing tricky.

An individual who is licensed by the state and who acts on behalf of his or her client, the buyer or seller. The real estate agent who does not have a broker’s license must work for a licensed broker.

A quitclaim deed is a document transferring ownership of property from one party to another. It transfers the title of the property — but only transfers what the seller actually owns.

If two people own a home jointly, one person could only transfer their half of the property via quitclaim. This type of transaction is commonly used when property is being transferred between family members not using traditional real estate channels.

When you make an offer, sellers will require you to submit proof of funds. If you’re buying a house with a mortgage, it shows them that you have the cash available for your down payment and closing costs. If you’re paying all cash, your proof of funds shows you actually have the money.

The following documents qualify as proof of funds:

  • Original or online bank statements with bank letterhead
  • Copy of a money market account balance with the bank’s logo or letterhead
  • Certified financial statements, such as an income or cash flow statement that’s been signed off on by an accountant
  • An open equity line of credit

A probate sale happens when a homeowner dies without writing a will or leaving a property to someone. In such situations, the probate court would authorize an estate attorney, or other representative, to hire a real estate agent to sell the home.

The total process will usually be a bit more complicated and therefore will take more time than a conventional sale.

A special insurance paid by a borrower in monthly installments, typically of loans of more than 80 percent of the value of the property.

If you have ever wondered why it is common to put 20 percent down for a down payment, avoiding PMI is the reason.

The four parts that make up a borrower’s monthly mortgage payment.

The amount of money a buyer borrows.

The mortgage company tells a buyer in advance of the formal mortgage application, how much money the borrower can afford to borrow. Some pre-qualifications have conditions that the borrower must meet.

A fine imposed on the borrower by the lender when the loan is paid off before it comes due.

Funds paid by the borrower at closing based on the number of days left in the month of closing.

A preliminary titel report reveals any issues with a title that need to be dealt with by the seller in order to deliver a clear title. It gives details such as ownership history, liens, and easements. The title company gathers this report by searching existing property records at the county recorder’s office.

This report is required for a title insurance company to issue a title insurance policy. Most lenders require borrowers to purchase title insurance coverage to protect their interest in a property.

A higher level of buyer/borrower prequalification required by a mortgage lender. Some preapprovals have conditions the borrower must meet.

Mixed-use development that sets aside areas for residential use, commercial use, and public areas such as schools, parks, and so on.

A real estate contract that has been accepted on a property but the transaction has not closed.

A written document from a seller’s mortgage company stating the amount of money needed to pay the loan in full.

When a listing that is on market is available to the public for viewings and showings.

A service that compiles available properties for sale by member brokers.

A mortgage pre-approval letter is important because it gives home buyers an idea of what they can afford. A mortgage pre-approval letter is issued by the lender and identifies the terms, loan type and loan amount the buyer qualifies for after checking the buyer’s debt-to-income ratios along with cash on hand and credit history.

Many sellers or their agents require a mortgage letter with any home offer that isn’t all-cash, since it acts as proof the buyer has been qualified to get financing.

A business that or an individual who unites lenders and borrowers and processes mortgage applications.

One who underwrites a loan for another. Some lenders have investors underwrite a buyer’s loan.

An administrative individual who is assigned to check, verify, and assemble all of the documents and the buyer’s funds and the borrower’s loan for closing.

The group of mortgage documents that the borrower’s lender sends to the closing or escrow.

A loan contingency is a clause or addendum (also known as a mortgage contingency) in an offer contract that allows a buyer to back out of a deal and keep their deposit if they are unable to secure a mortgage with specified terms during a fixed period of time.

A written document telling the borrowers that the mortgage company has agreed to lend them a specific amount of money at a specific interest rate for a specific period of time. The loan commitment may also contain conditions upon which the loan commitment is based.

The costs a lender charges to close a borrower’s loan. These costs vary from lender to lender and from market to market.

A document that buyers who are requesting a loan fill out and submit to their lender.

A document that establishes the real estate agent’s agreement with the sellers to represent their property in the market.

The real estate sales agent that is representing the sellers and their property, through a listing agreement.

A property lien is unpaid debt on a piece of property. It’s a legal notice and denotes legal action taken by a lender to recover the debt they are owed. It can come from unpaid taxes, a court judgement, or unpaid bills and can slow down the homebuying process when unattended.

In real estate, the lender refers to the individual, financial institution, or private group lending money to a buyer to purchase property with the expectation the loan will be repaid with interest, in agreed upon increments, by a certain date.

A form of ownership or taking title to property which means each party owns the whole property and that ownership is not separate. In the event of the death of one party, the survivor owns the property in its entirety.

When the borrower and lender agree to lock a rate on loan. Can have terms and conditions attached to the lock.

The borrower decides to delay locking their interest rate on their loan. They can float their rate in expectation of the rate moving down. At the end of the float period they must lock a rate.

A contract in which the buyer takes possession of the property while the seller retains the title to the property until the loan is paid.

An inspection happens when buyers pay a licensed professional inspector to visit the home and prepare a report on its condition and any needed repairs. The inspection often happens as part of the due diligence period, so buyers can fully assess if they want to buy a particular home as is, or ask the seller to either complete or pay for certain repairs.

Fixtures or personal property that are included in a contract or offer to purchase.

An iBuyer is an online company that makes an offer on your home “instantly”. iBuyers then resell your home for a profit. While iBuyers advertise convenience and the ability to save you money and the ability to avoid paying commissions, it usually costs the seller more money to sell through an iBuyer. Some companies will advertise lower to no commissions but the seller will pay more in fees that are not readily advertised than what a commission would be for a regular agent.

Offers a fixed rate the first 5 years and then adjusts annually for the next 25 years.

U.S. Department of Housing and Urban Development.

Coverage that includes personal liability and theft insurance in addition to hazard insurance.

A homeowner’s association is a private association that manages a planned community or condominium. When you purchase a property that is managed by an HOA, you agree to abide by the HOA’s rules and pay its monthly or annually HOA dues. If you fail to pay and/or comply, they often have the ability to file a lien against the property and/or foreclose on the property. HOAs are designed to help retain property value in neighborhoods by keeping everything up to a certain standard they set forth.

In Las Vegas, the majority of homes built from the 2000s onwards have HOAs.

A home sale contingency is for a buyer to indicate to a seller that part of their condition to purchase the seller’s property relies on the buyer’s ability to finalize a close on their current property. This is often negotiated with a clause in a contract or with an addendum to a contract. An example of how such a contingency can be used would be if a buyer needs to sell their property in order to have the down payment required on the purchase of the new property, or would rather use their sale proceeds instead of their savings to make the down payment.

Depending on the market, it could hamper negotiations with a seller when a contingency is part of the picture.

Insurance that covers losses to real estate from damages that might affect its value.

Hard money loans are a way to borrow without using traditional lenders. Hard money lenders finance the loan based on the property in question, not on your credit score, and typically require a large down payment and short repayment schedule

Under the Real Estate Settlement Procedures Act, within three days of an application submission, lenders are required to provide in writing to potential borrowers a good faith estimate of closing costs.

A letter to a lender stating that a gift of cash has been made to the buyer(s) and that the person gifting the cash to the buyer is not expecting the gift to be repaid. The exact wording of the gift letter should be requested of the lender.

If a homeowner doesn’t make a mortgage payment (usually, for more than 90 days), foreclosure is a legal process during which the owner forfeits all property rights.

If they are unable to pay off outstanding debt on the property or sell it via short sale, the property enters a foreclosure auction. If no sale is made there, the lender takes control of the property.

Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.

Personal property that has become part of the property through permanent attachment.

With fixed rate mortgages, your interest rate stays the same for the duration of the loan. They are often available as 10, 15, 20 & 30-year loans. The 15- and 30-year loan are by far the most popular type of home loans, accounting for about 75% of all U.S. residential mortgages.

FHA loans are part of a group of loans that are insured by the federal government. This means that instead of actually lending money, the FHA insures banks and private lenders that they will cover losses they might incur in the event that the borrower does not repay the loan in full or timely.

This is a “fixer-upper” loan, which combines the mortgage loan with a loan to help pay for repairs or updates, such as structural repairs, or energy-related updates. It is not intended to lend based off of luxury upgrades such as adding a swimming pool or tennis courts.

A guarantee by the FHA that a percentage of a loan will be underwritten by a mortgage company or banker.

Federal Housing Administration

A form of property ownership where the owner has the right to use and dispose of property at will.

A property listing that has expired per the terms of the listing agreement.

Fixtures or personal property that are excluded from the contract or offer to purchase.

The escrow holder is the impartial third-party who collects the money, written instruments, documents, personal property, or other things of value to be held until the happening of specified events or the performance of described conditions, usually set forth in mutual, written instructions from the parties.

One of the major advantages of buying over renting. Equity is the investment a homeowner has in their home. To calculate equity, take the market value of the home and subtract any mortgages or liens against the property. The amount leftover is the amount of equity you have in the home.

If you buy a home worth $250,000 for $240,000, you gain what is known as instant equity, because there is a $10,000 difference between the value and the cost. When you sell a home you bought for $250,000 for $260,000, you’ll get to keep the equity in the home after the close, once all the expenses are paid.

It’s important to build equity as homeowners can leverage this financial asset to obtain loans to help finance items such as home repairs, or to pay off higher-interest debt.

The money given to the seller at the time the offer is made as a sign of the buyer’s good faith. It shows not only that the buyer is serious about buying, but that they are also willing to put their money where their mouth is. The earnest money deposit eventually goes toward the total down payment.

In Las Vegas, the EMD is held by the agreed upon escrow company from the Residential Purchase Agreement.

A due diligence period of time might be available in the purchase agreement, which is a time frame provided to a buyer to fully examine a property, often by hiring experts to inspect the property, perform tests, etc., so that a buyer may decide on how to proceed.

A buyer might also be afforded an opportunity to renegotiate the contract based off of their findings or possibly even to terminate within a specified time period, in order to not be considered in default of the contract. Due diligence allows a buyer to fully understand what they are buying.

A state-licensed individual who represents the seller and the buyer in a single transaction.

The amount of cash put toward a purchase by the borrower.

Discount points are also known as mortgage points. They’re fees homebuyers pay directly to the lender at the time of closing in exchange for reduced interest rates which can lower monthly mortgage payments.

Federal, state, county, and local requirements of disclosure that the seller provides and the buyer acknowledges.

Debt-to-income, or DTI, ratio is a number used by mortgage lenders which is determined by the total of your debt expenses, plus your monthly housing payment, divided by your gross monthly income, and multiplied by 100. This helps lenders determine affordability based off of their available loan programs, and allows them to estimate how much you can afford to pay monthly for a mortgage.

A score assigned to a borrower’s credit report based on information contained therein.

Includes all of the history for a borrower’s credit accounts, outstanding debts, and payment timelines on past or current debts.

The response to an offer or a bid by the seller or buyer after the original offer or bid.

Where the shareholders of the corporation are the inhabitants of the building. Each shareholder has the right to lease a specific unit. The difference between a co-op and a condo is in a co-op, one owns shares in a corporation; in a condo one owns the unit fee simple.

A commission offered to the buyer’s agent brokerage for bringing a buyer to the selling brokerage’s listing.

A type of mortgage that has certain limitations placed on it to meet secondary market guidelines. Mortgage companies, banks, and savings and loans underwrite conventional mortgages.

An agreement between the third-party relocation company and the seller (transferee) whereby the third-party company purchases property owned by the seller.

A sales contract in which the buyer takes possession of the property but the seller holds title until the loan is paid. Also known as an installment sale contract.

A provision in a contract requiring certain acts to be completed before the contract is binding.

A type of ownership in real property where all of the owners own the property, common areas and buildings together, with the exception of the interior of the unit to which they have title. Often mistakenly referred to as a type of construction or development, it actually refers to the type of ownership.

A study done by real estate sales agents and brokers using active, pending, and sold comparable properties to estimate a listing price for a property.

Community property refers to property acquired by a married couple and owned equally by both spouses.

The percentage split of commission compensation between the real estate sales brokerage and the real estate sales agent or broker.

The compensation paid to the listing brokerage by the seller for selling the property. A buyer agency agreement may require the buyer to pay a commission to his or her agent.

If a buyer is having trouble getting approved for a loan, they can elicit the help of a co-borrower. This person is usually a family member or friend who’s added to the mortgage and guarantees the loan. They’re listed on the title, have ownership interest, sign loan documents, and are obligated to pay monthly mortgage payments if the buyer is unable to.

CLUE (Comprehensive Loss Underwriting Exchange) is the insurance industry’s national database that assigns individuals a risk score. CLUE also has an electronic file of a properties insurance history. These files are accessible by insurance companies nationally. These files could impact the ability to sell property as they might contain information that a prospective buyer might find objectionable, and in some cases not even insurable.

Closing costs are an assortment of fees, including fees charged by: a lender, the title company, attorneys, insurance companies, taxing authorities, homeowner’s associations, real estate agents, and other closing settlement related companies. These closing costs are typically paid at the time of closing a real estate transaction.

Closing costs are completely separate from the down payment.

The end of a transaction process where the deed is delivered, documents are signed, and funds are dispersed. Once all of these items are completed, then a buyer’s access to the property is then provided, and the buyer is considered the new homeowner.

Note that signing and closing are not the same thing, rather, signing is part of the closing process.

Cost incurred to maintain a property (taxes, interest, insurance, utilities, and so on).

The agent who shows the buyer’s property, negotiates the contract or offer for the buyer, and works with the buyer to close the transaction.

A real estate broker retained by the buyer who has a fiduciary duty to the buyer.

A buydown is a mortgage-financing technique lowering the buyer’s interest rate for anywhere from a few years to the lifetime of the loan. Usually, the property seller or contractor makes payments to the mortgage lender lowering the buyer’s monthly interest rates, which, in turn, lowers their monthly payments.

A state licensed individual who acts as the agent for the seller or buyer. A broker can have many agent licensees that work under them that they are responsible for.

Transfers title to personal property in a transaction.

Instead of a traditional fixed-rate mortgage in which the owner pays on the loan in installments, a balloon mortgage is paid in one lump sum (e.g., the balloon payment). It’s usually associated with investment or construction projects that are issued for the short term and don’t require collateral.

A type of mortgage that is generally paid over a short period of time, but is amortized over a longer period of time. The borrower typically pays a combination of principal and interest. At the end of the loan term, the entire unpaid balance must be repaid.

When an offer is accepted contingent on the fall through or voiding of an accepted first offer on a property.

One in which the buyer agrees to fulfill the obligations of the existing loan agreement that the seller made with the lender. When assuming a mortgage, a buyer becomes personally liable for the payment of principal and interest. The original mortgagor should receive a written release from the liability when the buyer assumes the original mortgage.

A contract or offer clause stating that the seller will not repair or correct any problems with the property. Also used in listings and marketing materials. Sellers will often do this for houses that are priced below market value that need work done.

As-is can also be used in contracts. “As is” is in the condition at the time the offer was written, and should something happen to the property from the time the offer was written to the closing time which alters that condition, then that property is no longer “as is”, as it was, and should be brought back to its original “as is” condition at the time of offer, at the cost of seller. Or in the alternative, the seller should release the buyer from their obligation to purchase and refund the monies spent by the buyer, such as earnest money.

The price the third-party relocation company offers (under most contracts) the seller for his or her property. Generally, the average of two or more independent appraisals.

A document of opinion of property value at a specific point in time.

Fees that mortgage companies charge buyers at the time of written application for a loan; for example, fees for running credit reports of borrowers, property appraisal fees, and lender-specific fees.

For rentals, application fees are required to apply. These fees cover running credit reports. They are sometimes refundable and other times not.

The total costs (interest rate, closing costs, fees, and so on) that are part of a borrower’s loan, expressed as a percentage rate of interest. The total costs are amortized over the term of the loan.

The actual sale price after the seller successfully markets and sells his or her home through the broker of his or her choice. The sale is turned over to a third-party relocation company for closing, and the guaranteed offer is amended or changed.

The licensed real estate salesperson or broker who represents buyers or sellers.

A type of mortgage loan whose interest rate is tied to an economic index, which fluctuates with the market. Typical ARM periods are one, three, five, and seven years.

An addition to; a document.

A contract that is pending with attorney and inspection contingencies.

Allowed by law, tenants must be informed of showing 24 hours before you arrive.

The statement of income reported to the IRS for an independent contractor.

The delayed exchange of properties that qualifies for tax purposes as a tax-deferred exchange.

Residential Disclosure Guide

The seller must post a notice, which shows the current or projected rates, in a conspicuous place on the property.

The seller must complete the “Seller’s Real Property Disclosure” form, detailing the condition of the property, known defects, and any other aspects of the property which may affect its use or value. A real estate licensee, unless he is the seller of the property, may not complete this form.

The form must be fully and properly completed. If the seller has no knowledge, “no” is an appropriate answer to the “Are you aware …” questions. Each question must be answered with a mark in the corresponding “yes”, “no” or in some cases “n/a” box. Explanations of any “yes” answers, and a properly executed signature by the seller, are also required. The buyer may only sign the form after full and proper completion by the seller.


A Buyer may rescind the contract without penalty if he does not receive a fully and properly completed Seller’s Real Property Disclosure form. If a Buyer closes a transaction without a completed form or if a known defect is not disclosed to a Buyer, the Buyer may be entitled to treble damages, unless the Buyer waives his rights under NRS 113.150(6).

The seller of a property that is subject to a PTFO must provide the disclosure as a written statement that discloses the existence of and describes the PTFO, and includes language substantially similar to the legislatively-prescribed notice informing the buyer that the PTFO may lower the value of the property and that the laws of this State prohibit the enforcement of certain PTFOs created on or after May 20, 2011.

The information is provided by the Nevada Real Estate Division (NRED) in agreement with the Southern Nevada Health District (SNHD) to promote SNHD’s efforts to inform the public on drowning prevention.

A seller must disclose, in writing, to a potential buyer of property adjacent to open range, that livestock
grazing on the open range are permitted to enter the property; and that the parcel may be subject to county
or State claims of right-of-way.

The real estate licensee shall provide the form to the purchaser as soon as practicable, but before title is
transferred.

If the landlord requires approval of a prospective buyer and tenant, the landlord must post a sign which is clearly readable at the entrance of the park which advises consumers that before a manufactured home in the park is sold, the buyer and tenant must be approved by the landlord.

The seller must notify the buyer of the lien.

Federal law requires that the seller disclose any known presence of lead-based paint hazards and provide the
buyer with the EPA disclosure booklet, “Protect Your Family From Lead in Your Home,” along with any other
available records and/or reports.

A seller who has knowledge of the impact fee must give written notice to the buyer, including the amount of the impact fee and the name of the local government imposing the fee.

A licensee who acts as an agent in a real estate transaction must disclose to each party for whom the
licensee is acting as an agent and any unrepresented party all duties owed to the parties and the licensee’s
relationship as an agent to each party in the transaction.

If there is a construction defect, the contractor must disclose the information in understandable language that is underlined and in bold-faced type with capital letters. If the property is or has been the subject of a construction defect claim or lawsuit, the seller must provide the following information to the buyer:

  • copies of all notices given to contractor
  • expert opinions obtained by claimant
  • terms of settlement or order of judgment
  • detailed report of all repairs

The licensee must provide this form to all parties in the
transaction if he seeks to act for more than one party.

The seller must, at seller’s expense, provide an information statement with the sale of any unit within a common-interest community or condominium hotel. The statement is entitled “BEFORE YOU PURCHASE PROPERTY IN A [COMMON-INTEREST COMMUNITY] [CONDOMINIUM HOTEL] DID YOU KNOW…”

The owner of the property on the date the deferred taxes become due is liable for the deferred taxes.

An association or hotel unit owner has 10 days to provide the resale package after a request. If the documents are not provided within 10 days the buyer is not liable for any delinquent assessment. The resale package should be delivered as soon as practicable. Unless the buyer has accepted conveyance of the unit, the buyer may cancel the contract to purchase, by written notice, until midnight of the fifth calendar day following receipt of the resale package. This provision must be stated in the contract.

The notice must be posted and a copy provided to the buyer before the home is sold.

The disclosure must be delivered to the buyer at least 10 days prior to conveyance of the property.

The disclosure must be provided to the potential buyer before the conveyance of the property.

The disclosure will be provided to the buyer before the sales agreement is signed by way of the Residential Disclosure Guide in which it is contained. The buyer is advised to visit
SNHD’s website:
http://www.southernnevadahealthdistrict.org/health-topics/drowning-prevention.php.

The disclosure must be provided to the potential buyer, with the requirement that the buyer sign the disclosure form acknowledging the date of receipt of the original
disclosure document, before the sales agreement is signed.

The lien must be disclosed at the time the property is sold or transferred.

The disclosure is on a federally prescribed form and must be made as a condition of the sale before conveyance of the property.

The notice must be provided to the buyer before the property is conveyed.

The disclosure form must be presented to the client before any documents are signed by the client.

Construction defects must be disclosed to the buyer before purchase of the residence. If the property is or has been the subject of a defect claim or lawsuit, the information must be disclosed 30 days before close of escrow, or if escrow is less than 30 days, then immediately upon signing the sales agreement. If a claim
is made while in escrow, the disclosure must be made within 24 hours of notice of complaint.

If a licensee makes such a disclosure, the consent must be obtained from all parties before the licensee may continue to act in his capacity as an agent.

In a transaction requiring a public offering statement (further detailed below), the information statement is part of the public offering statement and is due no later than the date an offer to purchase becomes binding on the buyer. If the unit has not been inspected by the buyer, the buyer will have 5 calendar days to cancel the contract from the date of execution. In a resale transaction, the information statement is part of the resale package. A buyer has 5 calendar days to cancel the contract after receipt of the resale package. It is good practice to provide the information statement no later than 5 days before the contract becomes binding on the buyer in any type of transaction.

Depending upon the transaction, the following disclosures may also be required from a buyer, seller or licensee:

  • AIRPORT NOISE

Buyers should investigate the impact of airport flight paths and the noise levels at different times of the day over that property.

  • BUILDING & ZONING CODES

The purpose of the building and zoning disclosure is to inform the buyer of transportation beltways and/or planned or anticipated land use within proximity of the subject property of which the seller has knowledge. For more information on building and zoning codes, contact your local jurisdiction.

  • ENVIRONMENTAL HAZARDS

Although the seller is required to disclose the presence of environmental hazards, a statement that the seller is not aware of a defect or hazard does not mean that it does not exist. It is the buyer’s responsibility to be informed and take additional steps to further investigate. Some potential hazards that may be found in Nevada include:

  • Radon (www.epa.gov/radon)
  • Floods (http://www.floodsmart.gov)
  • Methamphetamine Labs (NRS 40.770 & 489.776)
  • Wood-Burning Devices (http://www.epa.gov/iaq/pubs/combust.html)
  • Underground Storage Tanks (http://epa.gov/oust/index.htm)
  • Septic Systems (http://water.epa.gov/infrastructure/septic/)
  • Wells (http://water.epa.gov/drink/info/well/index.cfm)
  • Land and Cleanup (http://www2.epa.gov/learnissues/learn-about-land-and-cleanup)
  • Groundwater (http://water.epa.gov/drink/resources/topics.cfm)
  • Public Pools & Spas (http://www.poolsafely.gov/)
  • Molds and Moisture (http://www.epa.gov/mold/)


For more information on environmental hazards, visit:
www.epa.gov.

  • GAMING

Initial Purchaser in New Construction Only
If there is a gaming district near the property, the seller must disclose information which includes a copy of the most recent gaming enterprise district map, the location of the nearest gaming enterprise district, and notice that the map is subject to change. This disclosure is required for Nevada counties with population over 400,000. The information must be provided at least 24 hours before the seller signs the sales agreement. The buyer may waive the 24-hour period. The seller must retain a copy of the disclosure.
For more information on gaming, see: NRS 113.080

  • HOME INSPECTIONS

When obtaining an FHA-insured loan, this disclosure informs the buyer about the limits of the Federal Housing Administration appraisal inspection and suggests the buyer obtain a home inspection to evaluate the physical condition of the property prior to purchase. The form is entitled, “For Your Protection: Get a Home Inspection.”
For more information on FHA home inspections, visit: www.hud.gov.

  • MILITARY ACTIVITIES

The purpose of the Military Activities Disclosure is to make the purchaser of residential property aware of planned or anticipated military activity within the proximity of the property. Counties in which the military files Military Activities Plans include Clark County, Washoe County, Churchill County and Mineral County. For more information on military activities plans in these counties, contact the local municipal jurisdiction or the Public Information Officer of the Military Installation in your county.

  • LICENSEE DISCLOSURES

In addition to the “Consent to Act” and the “Duties Owed by a Nevada Real Estate Licensee” forms (see pages 8 & 10), a real estate licensee is required to disclose other information such as his relationship to one or more parties in the transaction and/or having a personal interest in the property.
For more information regarding duties and disclosures owed by a
licensee, see: NRS 645.252-645.254, NAC 645.637 and NAC
645.640.

  • ROAD MAINTENANCE DISTRICT

The sale of residential property within a road maintenance district is prohibited unless the seller provides notice to the purchaser, including the amount of assessments for the last two years. If the district has been in existence for less than 2 years before notice is provided to the purchaser, then the amount of assessments shall be given for the period since the district was created.
For more information, see: NRS 320.130.

  • SOIL REPORT (New Construction Only)

If the property has not been occupied by the buyer more than 120 days before completion, the seller must give notice of any soil report prepared for the property or for the subdivision in which the property is located. The seller must provide such notice upon signing the sales agreement.

Upon receiving the notice, the buyer must submit a written request within 5 days for a copy of the actual report. The seller must provide a free report to the buyer within 5 days of receiving such request. Upon receiving the soil report, the buyer has 20 days to rescind the sales agreement. This rescission right may be waived, in writing, by the buyer.
For more information, see: NRS 113.135.

The notice must contain the name, address and telephone number of the public utility and the Division of Consumer Complaint Resolution of the Public Utilities Commission of Nevada.

The written consent must include:

  1. A description of the real estate transaction;
  2. A statement that the licensee is acting for two or more parties to the transaction and that, in acting for these parties, the licensee has a conflict of interest;
  3. A statement that the licensee will not disclose any confidential information for 1 year after the revocation or termination of the brokerage agreement unless he is required to do so per court order or he is given written permission by that party;
  4. A statement that a party is not required to consent to the licensee acting on his behalf;
  5. A statement that the party is giving his consent without coercion and understands the terms of the consent given.

A client may choose to waive the broker’s duty to present all offers by signing a waiver on a form, the “Waiver
Form,” prescribed by the Division. Concurrent with the option of a client to waive the duty of his/her broker to
present all offers is the form “Authorization to Negotiate Directly with Seller,” which gives permission in writing to authorize a licensee to negotiate a sale or lease directly with a seller. Both forms must be utilized and signed by a client who waives the duty to present all offers.
Otherwise, a licensee for a buyer does not have the permission of the seller’s broker to present offers or
negotiate with the sellers directly.

The purpose of the disclosure relating to water and sewer rates is to inform the buyer of a previously unsold home or improved lot of public utility rates when service is for more than 25 but fewer than 2,000 customers.

The purpose of the Seller’s Real Property Disclosure form is to make the buyer aware of the overall condition of the property before it is transferred. This disclosure is not a guarantee nor does it take the place of an inspection. In some cases a Seller has never lived on the property and may have no knowledge of the condition of the property. The Buyer is advised to obtain an independent inspection performed by a properly licensed home inspector. This form is not required for new home sales.

The purpose of the disclosure is to make the buyer aware that the property is subject to a Private Transfer Fee Obligation (PTFO) which will require the buyer, upon conveyance of the property by the seller, to pay either a one-time fixed amount or a one-time percentage of the purchase price to a third party payee.

The purpose of the Open Range Disclosure is to inform the prospective buyer of a home or an improved or
unimproved lot adjacent to open range that livestock are permitted to graze or roam on the property. Open
range means all unenclosed land outside of cities and towns upon which cattle, sheep or other domestic
animals by custom, license, lease or permit are grazed or permitted to roam. It also serves to inform the
prospective buyer that the parcel may be subject to county or State claims of right-of-way, (commonly
referred to as R.S. 2477 rights-of-way) including rights-of-way that may be unrecorded, undocumented or
unsurveyed; and used by miners, ranchers, hunters or others, for access or recreational use, in a manner
which interferes with the use and enjoyment of the parcel.

The purpose of the Used Manufactured/Mobile Home disclosure is to make the buyer aware that a used
manufactured or mobile home that has not been converted to real property is personal property and
subject to personal property taxes.

The purpose of the disclosure relating to placing or buying a manufactured or mobile home in a manufactured home park is to make the buyer aware that he may be subject to approval by the landlord of the manufactured home park if the manufactured or mobile home will remain in the park.

The purpose of the lead-based paint disclosure is to make the buyer aware that the residential property (if built prior to 1978) may present exposure to lead.

The seller of any property must give notice of any impact fees that may be imposed upon the buyer.
An impact fee is a charge imposed by a local government on new development (i.e., the construction,
reconstruction, redevelopment, conversion, alteration, relocation or enlargement of any structure which
increases the number of service units) to finance some of the costs attributable to the new development.

The purpose of the Duties Owed form is to make the buyer or seller aware of obligations owed by a real estate licensee to all parties involved in the transaction.

The purpose of disclosures relating to construction defects is to make the buyer aware of any construction defects in the property.

The purpose of the Consent to Act form is for the licensee to obtain the written consent to act for more than one party in a transaction.

The purpose of the information statement required when purchasing a home or unit in a common-interest
community or a condominium hotel is to make the buyer aware of all rights, obligations and other aspects related to owning a unit within a common-interest community (also known as a homeowner’s association) or a condominium hotel. The statement makes buyers aware that use of their units can be restricted by the Declaration or CC&R’s. It also alerts buyers that foreclosure of the unit is possible for failure to pay assessments.

If there are deferred taxes that have not been paid at the time the property is sold or transferred, the buyer must be notified in writing that there is a lien for deferred taxes on the property.

Does not pertain to Condominium Hotels


The statement of fees and assessments in the resale package may not be relied upon. It is necessary for any seller to purchase a statement of demand from the association and provide it to the buyer. The statement of
demand may be requested by the unit owner, his or her representative or the holder of a security interest on the unit. A statement of demand from the association sets forth the current outstanding assessments, fees and unpaid obligations, including foreclosure fees and attorney’s fees due from the seller. The statement of
demand remains effective for the period specified in the demand which must not be less than 15 business days from the date of delivery by the association to the seller. The association may provide a corrected statement of demand prior to the sale. Payment of the amount set forth in the statement of demand constitutes full payment of the amount due from the seller.

In transactions involving the resale of a unit previously sold by the developer, a resale package must be provided to the buyer at the expense of the seller. In addition to the information statement, the resale package includes the following: the declaration, bylaws, rules and regulations, monthly assessments, unpaid assessments of any kind, current operating budget, financial statement, reserve summary, unsatisfied judgments, and status of any pending legal actions.

If the property is a new unit in a common-interest community or a condominium hotel, or if the community is subject to any developmental rights, or contains converted buildings or contains units which may be in a time share, or is registered with the Securities and Exchange Commission, the buyer must also be provided with a Public Offering Statement disclosing applicable information, including:

  • development rights of contractors
  • construction schedule
  • description of proposed improvements
  • mechanical & electrical installations
  • initial or special fees
  • number & identity of units in timeshare

Unless the buyer has personally inspected the unit, the buyer may cancel the contract to purchase, by written notice, until midnight of the fifth calendar day following the date of execution of the contract. This provision must be stated in the contract.

If the seller fails to give this notice, the seller is liable to the buyer for the amount of the impact fee.

The content of the disclosure is based on what the seller is aware of at the time. If, after completion of the
disclosure form, the seller discovers a new defect or notices that a previously disclosed condition has worsened, the seller must inform the purchaser, in writing, as soon as practicable after discovery of the
condition, or before conveyance of the property. The buyer may not waive, and the seller may not require
a buyer to waive, any of the requirements of the disclosure as a condition of sale or for any other purpose.
In a sale or intended sale by foreclosure, the trustee and the beneficiary of the deed of trust shall provide, not later than the conveyance of the property to, or upon request from, the buyer:

  • written notice of any defects of which the trustee or beneficiary is aware; and
  • the contact information of any asset management company who provided asset management services, if any defects are repaired or replaced or attempted to be repaired or replaced. The asset management company shall provide a service report to the purchaser upon request.

If a Seller requests a Buyer to waive his rights or legal remedies under NRS 113.150 or otherwise, the Buyer should contact an attorney for advice regarding the legal consequences. A real estate licensee cannot explain the legal consequences of waiving a Buyer’s legal rights or remedies.


EFFECTIVE JULY, 2017 the form includes the following 2 additional disclosures

  • whether solar panels are installed on the subject property. If yes, then disclose whether the solar panels are leased, owned or financed.
  • whether the property is a participant in any conservation easement such as the Southern Nevada Water Authority’s Water Smart Landscape Program. Seller shall inform the buyer about conservation easements or the potential for other types of conservation easements as required by the statutory language below:

Conservation Easements: The subject property ___ is OR ___ is not subject to a Restrictive Covenant and Conservation Easement established by Nevada Revised Statute 111.390-440 such as the Southern Nevada Water Authority’s Water Smart Landscape Program.

Drowning is the leading cause of unintentional injury death in Clark County for children four years of age and under. The majority of drowning deaths occur in the family pool. Preventable mistakes include leaving a child unattended near a body of water in which a child’s nose and mouth can be
submerged.

More information on drowning facts, preventable mistakes, how to be prepared to prevent a drowning, pool security, drowning statistics, adult supervision and more can be obtained at SNHD’s website at:

http://www.southernnevadahealthdistrict.org/health-topics/drowning-prevention.php and
http://www.gethealthyclarkcounty.org/be-safe/index.php.

On the disclosure form, the buyer must acknowledge receipt of the EPA disclosure booklet and copies of lead reports, if available. Additionally, the buyer will receive a 10-day opportunity to conduct a risk assessment or may choose to waive this opportunity.

If the property will remain in the manufactured home park, make sure you have a lease agreement with the
park manager and that you know the park’s rules and regulations.

Remember: the seller or a manufactured home dealer cannot promise that you’ll be accepted as a tenant in a particular manufactured home park. You must apply for the lease yourself and should do so before finalizing the purchase of your home. The landlord must approve or deny a completed application from a prospective buyer and tenant within 10 days after the date the application is submitted.

The notice regarding the existence of a PTFO in the seller’s disclosure must be in substantially the following form:

A private transfer fee obligation has been created with respect to this property. The private transfer fee obligation may lower the value of this property. The laws of this State prohibit the enforcement of certain private transfer fee obligations that are created on or after May 20, 2011 and impose certain notice requirements with respect to private transfer fee obligations that were created before May 20, 2011.

The disclosure acknowledges fencing the property to keep livestock out and recognizes the property owner’s entitlement to damages if livestock enter a fenced property but warns against harming roaming livestock even on a fenced property.

The law requires that the seller retain a copy of the disclosure document that has been signed by the buyer
acknowledging the date of receipt of the document, provide a copy to the buyer, and record the original disclosure document containing the buyer’s signature and the seller’s notarized signature in the office of the county recorder in the county where the property is located.

This disclosure also informs the purchaser that title will not pass unless the county assessor’s endorsement is placed on the face of the title, verifying that taxes have been paid in full.


The disclosure also instructs the consumer to submit certain documents to Nevada’s Manufactured Housing
Division and the county assessor within 45 days after the sale is complete and before a certificate of ownership will be issued.

A Nevada licensee who has entered into a brokerage agreement to represent a client in a real estate
transaction shall:

  1. Exercise reasonable skill and care to carry out the terms of the brokerage agreement and the licensee’s duties in the brokerage agreement;
  2. Not disclose, except to the licensee’s broker, confidential information relating to a client for 1 year after the revocation or termination of the brokerage agreement, unless licensee is required to do so by court order or the client gives written permission;
  3. Seek a sale, purchase, option, rental or lease of real property at the price and terms stated in the brokerage agreement or at a price acceptable to the client;
  4. Present all offers made to or by the client as soon as practicable, unless the client chooses to waive the duty of the licensee to present all offers and signs a waiver of the duty on a form prescribed by the Division;
  5. Disclose to the client material facts of which the licensee has knowledge concerning the real estate
    transaction;
  6. Advise the client to obtain advice from an expert relating to matters which are beyond the expertise of
    the licensee; and
  7. Account to the client for all money and property the licensee receives in which the client may have an
    interest.

Do not pertain to Condominium Hotels


The resale package for a home or unit in a common-interest community must also include a statement from the association setting forth the amount of the monthly assessment for common expenses and any unpaid
obligations that are due from the selling unit’s owner, including management fees, transfer fees, fines, penalties, interest, collection costs, foreclosure fees, and attorney’s fee. Please be advised that while the resale package includes this information, changes to the law in 2013 no longer allow a seller or buyer to rely on this statement as accurate. The seller must obtain a “statement of demand” which is separate from the resale package.

Do not pertain to Condominium Hotels


The resale package for a home or unit in a common-interest community must also include a statement of any
transfer fees, transaction fees or any other fees associated with the resale of a unit.

If the property is located within a common-interest community and is the subject of a defect claim or lawsuit,
this information must be disclosed in the buyer’s resale package (see Common-Interest Communities).

Common-Interest Communities and Condominium Hotels

The seller must, at seller’s expense, provide an information statement with the sale of any unit within a common-interest community or condominium hotel. The statement is entitled “BEFORE YOU PURCHASE PROPERTY IN A [COMMON-INTEREST COMMUNITY] [CONDOMINIUM HOTEL] DID YOU KNOW…”

An association or hotel unit owner has 10 days to provide the resale package after a request. If the documents are not provided within 10 days the buyer is not liable for any delinquent assessment. The resale package should be delivered as soon as practicable. Unless the buyer has accepted conveyance of the unit, the buyer may cancel the contract to purchase, by written notice, until midnight of the fifth calendar day following receipt of the resale package. This provision must be stated in the contract.

In a transaction requiring a public offering statement (further detailed below), the information statement is part of the public offering statement and is due no later than the date an offer to purchase becomes binding on the buyer. If the unit has not been inspected by the buyer, the buyer will have 5 calendar days to cancel the contract from the date of execution. In a resale transaction, the information statement is part of the resale package. A buyer has 5 calendar days to cancel the contract after receipt of the resale package. It is good practice to provide the information statement no later than 5 days before the contract becomes binding on the buyer in any type of transaction.

The purpose of the information statement required when purchasing a home or unit in a common-interest
community or a condominium hotel is to make the buyer aware of all rights, obligations and other aspects related to owning a unit within a common-interest community (also known as a homeowner’s association) or a condominium hotel. The statement makes buyers aware that use of their units can be restricted by the Declaration or CC&R’s. It also alerts buyers that foreclosure of the unit is possible for failure to pay assessments.

Does not pertain to Condominium Hotels


The statement of fees and assessments in the resale package may not be relied upon. It is necessary for any seller to purchase a statement of demand from the association and provide it to the buyer. The statement of
demand may be requested by the unit owner, his or her representative or the holder of a security interest on the unit. A statement of demand from the association sets forth the current outstanding assessments, fees and unpaid obligations, including foreclosure fees and attorney’s fees due from the seller. The statement of
demand remains effective for the period specified in the demand which must not be less than 15 business days from the date of delivery by the association to the seller. The association may provide a corrected statement of demand prior to the sale. Payment of the amount set forth in the statement of demand constitutes full payment of the amount due from the seller.

In transactions involving the resale of a unit previously sold by the developer, a resale package must be provided to the buyer at the expense of the seller. In addition to the information statement, the resale package includes the following: the declaration, bylaws, rules and regulations, monthly assessments, unpaid assessments of any kind, current operating budget, financial statement, reserve summary, unsatisfied judgments, and status of any pending legal actions.

If the property is a new unit in a common-interest community or a condominium hotel, or if the community is subject to any developmental rights, or contains converted buildings or contains units which may be in a time share, or is registered with the Securities and Exchange Commission, the buyer must also be provided with a Public Offering Statement disclosing applicable information, including:

  • development rights of contractors
  • construction schedule
  • description of proposed improvements
  • mechanical & electrical installations
  • initial or special fees
  • number & identity of units in timeshare

Unless the buyer has personally inspected the unit, the buyer may cancel the contract to purchase, by written notice, until midnight of the fifth calendar day following the date of execution of the contract. This provision must be stated in the contract.

Do not pertain to Condominium Hotels


The resale package for a home or unit in a common-interest community must also include a statement from the association setting forth the amount of the monthly assessment for common expenses and any unpaid
obligations that are due from the selling unit’s owner, including management fees, transfer fees, fines, penalties, interest, collection costs, foreclosure fees, and attorney’s fee. Please be advised that while the resale package includes this information, changes to the law in 2013 no longer allow a seller or buyer to rely on this statement as accurate. The seller must obtain a “statement of demand” which is separate from the resale package.

Do not pertain to Condominium Hotels


The resale package for a home or unit in a common-interest community must also include a statement of any
transfer fees, transaction fees or any other fees associated with the resale of a unit.

If the property is located within a common-interest community and is the subject of a defect claim or lawsuit,
this information must be disclosed in the buyer’s resale package (see Common-Interest Communities).

Consent to Act

The licensee must provide this form to all parties in the
transaction if he seeks to act for more than one party.

If a licensee makes such a disclosure, the consent must be obtained from all parties before the licensee may continue to act in his capacity as an agent.

The written consent must include:

  1. A description of the real estate transaction;
  2. A statement that the licensee is acting for two or more parties to the transaction and that, in acting for these parties, the licensee has a conflict of interest;
  3. A statement that the licensee will not disclose any confidential information for 1 year after the revocation or termination of the brokerage agreement unless he is required to do so per court order or he is given written permission by that party;
  4. A statement that a party is not required to consent to the licensee acting on his behalf;
  5. A statement that the party is giving his consent without coercion and understands the terms of the consent given.

The purpose of the Consent to Act form is for the licensee to obtain the written consent to act for more than one party in a transaction.

Construction Defects

If there is a construction defect, the contractor must disclose the information in understandable language that is underlined and in bold-faced type with capital letters. If the property is or has been the subject of a construction defect claim or lawsuit, the seller must provide the following information to the buyer:

  • copies of all notices given to contractor
  • expert opinions obtained by claimant
  • terms of settlement or order of judgment
  • detailed report of all repairs

Construction defects must be disclosed to the buyer before purchase of the residence. If the property is or has been the subject of a defect claim or lawsuit, the information must be disclosed 30 days before close of escrow, or if escrow is less than 30 days, then immediately upon signing the sales agreement. If a claim
is made while in escrow, the disclosure must be made within 24 hours of notice of complaint.

The purpose of disclosures relating to construction defects is to make the buyer aware of any construction defects in the property.

If the property is located within a common-interest community and is the subject of a defect claim or lawsuit,
this information must be disclosed in the buyer’s resale package (see Common-Interest Communities).

Duties Owed

A licensee who acts as an agent in a real estate transaction must disclose to each party for whom the
licensee is acting as an agent and any unrepresented party all duties owed to the parties and the licensee’s
relationship as an agent to each party in the transaction.

The disclosure form must be presented to the client before any documents are signed by the client.

A client may choose to waive the broker’s duty to present all offers by signing a waiver on a form, the “Waiver
Form,” prescribed by the Division. Concurrent with the option of a client to waive the duty of his/her broker to
present all offers is the form “Authorization to Negotiate Directly with Seller,” which gives permission in writing to authorize a licensee to negotiate a sale or lease directly with a seller. Both forms must be utilized and signed by a client who waives the duty to present all offers.
Otherwise, a licensee for a buyer does not have the permission of the seller’s broker to present offers or
negotiate with the sellers directly.

The purpose of the Duties Owed form is to make the buyer or seller aware of obligations owed by a real estate licensee to all parties involved in the transaction.

A Nevada licensee who has entered into a brokerage agreement to represent a client in a real estate
transaction shall:

  1. Exercise reasonable skill and care to carry out the terms of the brokerage agreement and the licensee’s duties in the brokerage agreement;
  2. Not disclose, except to the licensee’s broker, confidential information relating to a client for 1 year after the revocation or termination of the brokerage agreement, unless licensee is required to do so by court order or the client gives written permission;
  3. Seek a sale, purchase, option, rental or lease of real property at the price and terms stated in the brokerage agreement or at a price acceptable to the client;
  4. Present all offers made to or by the client as soon as practicable, unless the client chooses to waive the duty of the licensee to present all offers and signs a waiver of the duty on a form prescribed by the Division;
  5. Disclose to the client material facts of which the licensee has knowledge concerning the real estate
    transaction;
  6. Advise the client to obtain advice from an expert relating to matters which are beyond the expertise of
    the licensee; and
  7. Account to the client for all money and property the licensee receives in which the client may have an
    interest.

Impact Fees

A seller who has knowledge of the impact fee must give written notice to the buyer, including the amount of the impact fee and the name of the local government imposing the fee.

The notice must be provided to the buyer before the property is conveyed.

The seller of any property must give notice of any impact fees that may be imposed upon the buyer.
An impact fee is a charge imposed by a local government on new development (i.e., the construction,
reconstruction, redevelopment, conversion, alteration, relocation or enlargement of any structure which
increases the number of service units) to finance some of the costs attributable to the new development.

If the seller fails to give this notice, the seller is liable to the buyer for the amount of the impact fee.

Lien for Deferred Taxes

The seller must notify the buyer of the lien.

The owner of the property on the date the deferred taxes become due is liable for the deferred taxes.

The lien must be disclosed at the time the property is sold or transferred.

If there are deferred taxes that have not been paid at the time the property is sold or transferred, the buyer must be notified in writing that there is a lien for deferred taxes on the property.

Manufactured Housing- Used Manufactured/Mobile Homes

The real estate licensee shall provide the form to the purchaser as soon as practicable, but before title is
transferred.

The purpose of the Used Manufactured/Mobile Home disclosure is to make the buyer aware that a used
manufactured or mobile home that has not been converted to real property is personal property and
subject to personal property taxes.

This disclosure also informs the purchaser that title will not pass unless the county assessor’s endorsement is placed on the face of the title, verifying that taxes have been paid in full.


The disclosure also instructs the consumer to submit certain documents to Nevada’s Manufactured Housing
Division and the county assessor within 45 days after the sale is complete and before a certificate of ownership will be issued.

Manufactured Housing - Manufactured Home Parks

If the landlord requires approval of a prospective buyer and tenant, the landlord must post a sign which is clearly readable at the entrance of the park which advises consumers that before a manufactured home in the park is sold, the buyer and tenant must be approved by the landlord.

The purpose of the disclosure relating to placing or buying a manufactured or mobile home in a manufactured home park is to make the buyer aware that he may be subject to approval by the landlord of the manufactured home park if the manufactured or mobile home will remain in the park.

If the property will remain in the manufactured home park, make sure you have a lease agreement with the
park manager and that you know the park’s rules and regulations.

Remember: the seller or a manufactured home dealer cannot promise that you’ll be accepted as a tenant in a particular manufactured home park. You must apply for the lease yourself and should do so before finalizing the purchase of your home. The landlord must approve or deny a completed application from a prospective buyer and tenant within 10 days after the date the application is submitted.

Open Range

A seller must disclose, in writing, to a potential buyer of property adjacent to open range, that livestock
grazing on the open range are permitted to enter the property; and that the parcel may be subject to county
or State claims of right-of-way.

The disclosure must be provided to the potential buyer, with the requirement that the buyer sign the disclosure form acknowledging the date of receipt of the original
disclosure document, before the sales agreement is signed.

The purpose of the Open Range Disclosure is to inform the prospective buyer of a home or an improved or
unimproved lot adjacent to open range that livestock are permitted to graze or roam on the property. Open
range means all unenclosed land outside of cities and towns upon which cattle, sheep or other domestic
animals by custom, license, lease or permit are grazed or permitted to roam. It also serves to inform the
prospective buyer that the parcel may be subject to county or State claims of right-of-way, (commonly
referred to as R.S. 2477 rights-of-way) including rights-of-way that may be unrecorded, undocumented or
unsurveyed; and used by miners, ranchers, hunters or others, for access or recreational use, in a manner
which interferes with the use and enjoyment of the parcel.

The disclosure acknowledges fencing the property to keep livestock out and recognizes the property owner’s entitlement to damages if livestock enter a fenced property but warns against harming roaming livestock even on a fenced property.

The law requires that the seller retain a copy of the disclosure document that has been signed by the buyer
acknowledging the date of receipt of the document, provide a copy to the buyer, and record the original disclosure document containing the buyer’s signature and the seller’s notarized signature in the office of the county recorder in the county where the property is located.

Private Transfer Fee Obligation

The seller of a property that is subject to a PTFO must provide the disclosure as a written statement that discloses the existence of and describes the PTFO, and includes language substantially similar to the legislatively-prescribed notice informing the buyer that the PTFO may lower the value of the property and that the laws of this State prohibit the enforcement of certain PTFOs created on or after May 20, 2011.

The disclosure must be provided to the potential buyer before the conveyance of the property.

The purpose of the disclosure is to make the buyer aware that the property is subject to a Private Transfer Fee Obligation (PTFO) which will require the buyer, upon conveyance of the property by the seller, to pay either a one-time fixed amount or a one-time percentage of the purchase price to a third party payee.

The notice regarding the existence of a PTFO in the seller’s disclosure must be in substantially the following form:

A private transfer fee obligation has been created with respect to this property. The private transfer fee obligation may lower the value of this property. The laws of this State prohibit the enforcement of certain private transfer fee obligations that are created on or after May 20, 2011 and impose certain notice requirements with respect to private transfer fee obligations that were created before May 20, 2011.

SRPD

The seller must complete the “Seller’s Real Property Disclosure” form, detailing the condition of the property, known defects, and any other aspects of the property which may affect its use or value. A real estate licensee, unless he is the seller of the property, may not complete this form.

The form must be fully and properly completed. If the seller has no knowledge, “no” is an appropriate answer to the “Are you aware …” questions. Each question must be answered with a mark in the corresponding “yes”, “no” or in some cases “n/a” box. Explanations of any “yes” answers, and a properly executed signature by the seller, are also required. The buyer may only sign the form after full and proper completion by the seller.


A Buyer may rescind the contract without penalty if he does not receive a fully and properly completed Seller’s Real Property Disclosure form. If a Buyer closes a transaction without a completed form or if a known defect is not disclosed to a Buyer, the Buyer may be entitled to treble damages, unless the Buyer waives his rights under NRS 113.150(6).

The disclosure must be delivered to the buyer at least 10 days prior to conveyance of the property.

The purpose of the Seller’s Real Property Disclosure form is to make the buyer aware of the overall condition of the property before it is transferred. This disclosure is not a guarantee nor does it take the place of an inspection. In some cases a Seller has never lived on the property and may have no knowledge of the condition of the property. The Buyer is advised to obtain an independent inspection performed by a properly licensed home inspector. This form is not required for new home sales.

The content of the disclosure is based on what the seller is aware of at the time. If, after completion of the
disclosure form, the seller discovers a new defect or notices that a previously disclosed condition has worsened, the seller must inform the purchaser, in writing, as soon as practicable after discovery of the
condition, or before conveyance of the property. The buyer may not waive, and the seller may not require
a buyer to waive, any of the requirements of the disclosure as a condition of sale or for any other purpose.
In a sale or intended sale by foreclosure, the trustee and the beneficiary of the deed of trust shall provide, not later than the conveyance of the property to, or upon request from, the buyer:

  • written notice of any defects of which the trustee or beneficiary is aware; and
  • the contact information of any asset management company who provided asset management services, if any defects are repaired or replaced or attempted to be repaired or replaced. The asset management company shall provide a service report to the purchaser upon request.

If a Seller requests a Buyer to waive his rights or legal remedies under NRS 113.150 or otherwise, the Buyer should contact an attorney for advice regarding the legal consequences. A real estate licensee cannot explain the legal consequences of waiving a Buyer’s legal rights or remedies.


EFFECTIVE JULY, 2017 the form includes the following 2 additional disclosures

  • whether solar panels are installed on the subject property. If yes, then disclose whether the solar panels are leased, owned or financed.
  • whether the property is a participant in any conservation easement such as the Southern Nevada Water Authority’s Water Smart Landscape Program. Seller shall inform the buyer about conservation easements or the potential for other types of conservation easements as required by the statutory language below:

Conservation Easements: The subject property ___ is OR ___ is not subject to a Restrictive Covenant and Conservation Easement established by Nevada Revised Statute 111.390-440 such as the Southern Nevada Water Authority’s Water Smart Landscape Program.

Water & Sewer Rates

The seller must post a notice, which shows the current or projected rates, in a conspicuous place on the property.

The notice must be posted and a copy provided to the buyer before the home is sold.

The notice must contain the name, address and telephone number of the public utility and the Division of Consumer Complaint Resolution of the Public Utilities Commission of Nevada.

The purpose of the disclosure relating to water and sewer rates is to inform the buyer of a previously unsold home or improved lot of public utility rates when service is for more than 25 but fewer than 2,000 customers.

Lead-Based Paint

Federal law requires that the seller disclose any known presence of lead-based paint hazards and provide the
buyer with the EPA disclosure booklet, “Protect Your Family From Lead in Your Home,” along with any other
available records and/or reports.

The disclosure is on a federally prescribed form and must be made as a condition of the sale before conveyance of the property.

The purpose of the lead-based paint disclosure is to make the buyer aware that the residential property (if built prior to 1978) may present exposure to lead.

On the disclosure form, the buyer must acknowledge receipt of the EPA disclosure booklet and copies of lead reports, if available. Additionally, the buyer will receive a 10-day opportunity to conduct a risk assessment or may choose to waive this opportunity.

Pool Safety and Drowning Prevention

The information is provided by the Nevada Real Estate Division (NRED) in agreement with the Southern Nevada Health District (SNHD) to promote SNHD’s efforts to inform the public on drowning prevention.

The disclosure will be provided to the buyer before the sales agreement is signed by way of the Residential Disclosure Guide in which it is contained. The buyer is advised to visit
SNHD’s website:
http://www.southernnevadahealthdistrict.org/health-topics/drowning-prevention.php.

The purpose of the Southern Nevada Health District’s pool safety and drowning prevention disclosure is to make the buyer aware of the risk of death by drowning in private and public pools particularly for children 4 years or younger.

Drowning is the leading cause of unintentional injury death in Clark County for children four years of age and under. The majority of drowning deaths occur in the family pool. Preventable mistakes include leaving a child unattended near a body of water in which a child’s nose and mouth can be
submerged.

More information on drowning facts, preventable mistakes, how to be prepared to prevent a drowning, pool security, drowning statistics, adult supervision and more can be obtained at SNHD’s website at:

http://www.southernnevadahealthdistrict.org/health-topics/drowning-prevention.php and
http://www.gethealthyclarkcounty.org/be-safe/index.php.

Miscellaneous Disclosures

Depending upon the transaction, the following disclosures may also be required from a buyer, seller or licensee:

  • AIRPORT NOISE

Buyers should investigate the impact of airport flight paths and the noise levels at different times of the day over that property.

  • BUILDING & ZONING CODES

The purpose of the building and zoning disclosure is to inform the buyer of transportation beltways and/or planned or anticipated land use within proximity of the subject property of which the seller has knowledge. For more information on building and zoning codes, contact your local jurisdiction.

  • ENVIRONMENTAL HAZARDS

Although the seller is required to disclose the presence of environmental hazards, a statement that the seller is not aware of a defect or hazard does not mean that it does not exist. It is the buyer’s responsibility to be informed and take additional steps to further investigate. Some potential hazards that may be found in Nevada include:

  • Radon (www.epa.gov/radon)
  • Floods (http://www.floodsmart.gov)
  • Methamphetamine Labs (NRS 40.770 & 489.776)
  • Wood-Burning Devices (http://www.epa.gov/iaq/pubs/combust.html)
  • Underground Storage Tanks (http://epa.gov/oust/index.htm)
  • Septic Systems (http://water.epa.gov/infrastructure/septic/)
  • Wells (http://water.epa.gov/drink/info/well/index.cfm)
  • Land and Cleanup (http://www2.epa.gov/learnissues/learn-about-land-and-cleanup)
  • Groundwater (http://water.epa.gov/drink/resources/topics.cfm)
  • Public Pools & Spas (http://www.poolsafely.gov/)
  • Molds and Moisture (http://www.epa.gov/mold/)


For more information on environmental hazards, visit:
www.epa.gov.

  • GAMING

Initial Purchaser in New Construction Only
If there is a gaming district near the property, the seller must disclose information which includes a copy of the most recent gaming enterprise district map, the location of the nearest gaming enterprise district, and notice that the map is subject to change. This disclosure is required for Nevada counties with population over 400,000. The information must be provided at least 24 hours before the seller signs the sales agreement. The buyer may waive the 24-hour period. The seller must retain a copy of the disclosure.
For more information on gaming, see: NRS 113.080

  • HOME INSPECTIONS

When obtaining an FHA-insured loan, this disclosure informs the buyer about the limits of the Federal Housing Administration appraisal inspection and suggests the buyer obtain a home inspection to evaluate the physical condition of the property prior to purchase. The form is entitled, “For Your Protection: Get a Home Inspection.”
For more information on FHA home inspections, visit: www.hud.gov.

  • MILITARY ACTIVITIES

The purpose of the Military Activities Disclosure is to make the purchaser of residential property aware of planned or anticipated military activity within the proximity of the property. Counties in which the military files Military Activities Plans include Clark County, Washoe County, Churchill County and Mineral County. For more information on military activities plans in these counties, contact the local municipal jurisdiction or the Public Information Officer of the Military Installation in your county.

  • LICENSEE DISCLOSURES

In addition to the “Consent to Act” and the “Duties Owed by a Nevada Real Estate Licensee” forms (see pages 8 & 10), a real estate licensee is required to disclose other information such as his relationship to one or more parties in the transaction and/or having a personal interest in the property.
For more information regarding duties and disclosures owed by a
licensee, see: NRS 645.252-645.254, NAC 645.637 and NAC
645.640.

  • ROAD MAINTENANCE DISTRICT

The sale of residential property within a road maintenance district is prohibited unless the seller provides notice to the purchaser, including the amount of assessments for the last two years. If the district has been in existence for less than 2 years before notice is provided to the purchaser, then the amount of assessments shall be given for the period since the district was created.
For more information, see: NRS 320.130.

  • SOIL REPORT (New Construction Only)

If the property has not been occupied by the buyer more than 120 days before completion, the seller must give notice of any soil report prepared for the property or for the subdivision in which the property is located. The seller must provide such notice upon signing the sales agreement.

Upon receiving the notice, the buyer must submit a written request within 5 days for a copy of the actual report. The seller must provide a free report to the buyer within 5 days of receiving such request. Upon receiving the soil report, the buyer has 20 days to rescind the sales agreement. This rescission right may be waived, in writing, by the buyer.
For more information, see: NRS 113.135.

Mortgage

A guarantee on a mortgage amount backed by the U.S. Department of Veterans Affairs.

A VA loan is a loan guaranteed by the government (Department of Veteran Affairs) and available to the military, active and retired, and even for some eligible spouses, at low-to-no-down payment scenarios with competitive rates and fees.

An institutional investment market that purchases mortgages from mortgage lenders.

Refinancing is when you restructure your home loan, replacing your old loan with an entirely new loan that has different rates and payment structures. The main reason people refinance their home loans is to get a lower interest rate on their mortgage, and therefore lower not only the monthly payment but also the overall debt owed.

You can also refinance your loan to get rid of Private Mortgage Insurance (PMI).

A special insurance paid by a borrower in monthly installments, typically of loans of more than 80 percent of the value of the property.

If you have ever wondered why it is common to put 20 percent down for a down payment, avoiding PMI is the reason.

The four parts that make up a borrower’s monthly mortgage payment.

The amount of money a buyer borrows.

The mortgage company tells a buyer in advance of the formal mortgage application, how much money the borrower can afford to borrow. Some pre-qualifications have conditions that the borrower must meet.

A fine imposed on the borrower by the lender when the loan is paid off before it comes due.

A higher level of buyer/borrower prequalification required by a mortgage lender. Some preapprovals have conditions the borrower must meet.

A written document from a seller’s mortgage company stating the amount of money needed to pay the loan in full.

A mortgage pre-approval letter is important because it gives home buyers an idea of what they can afford. A mortgage pre-approval letter is issued by the lender and identifies the terms, loan type and loan amount the buyer qualifies for after checking the buyer’s debt-to-income ratios along with cash on hand and credit history.

Many sellers or their agents require a mortgage letter with any home offer that isn’t all-cash, since it acts as proof the buyer has been qualified to get financing.

A business that or an individual who unites lenders and borrowers and processes mortgage applications.

One who underwrites a loan for another. Some lenders have investors underwrite a buyer’s loan.

An administrative individual who is assigned to check, verify, and assemble all of the documents and the buyer’s funds and the borrower’s loan for closing.

The group of mortgage documents that the borrower’s lender sends to the closing or escrow.

A loan contingency is a clause or addendum (also known as a mortgage contingency) in an offer contract that allows a buyer to back out of a deal and keep their deposit if they are unable to secure a mortgage with specified terms during a fixed period of time.

A written document telling the borrowers that the mortgage company has agreed to lend them a specific amount of money at a specific interest rate for a specific period of time. The loan commitment may also contain conditions upon which the loan commitment is based.

The costs a lender charges to close a borrower’s loan. These costs vary from lender to lender and from market to market.

A document that buyers who are requesting a loan fill out and submit to their lender.

In real estate, the lender refers to the individual, financial institution, or private group lending money to a buyer to purchase property with the expectation the loan will be repaid with interest, in agreed upon increments, by a certain date.

When the borrower and lender agree to lock a rate on loan. Can have terms and conditions attached to the lock.

The borrower decides to delay locking their interest rate on their loan. They can float their rate in expectation of the rate moving down. At the end of the float period they must lock a rate.

Offers a fixed rate the first 5 years and then adjusts annually for the next 25 years.

Hard money loans are a way to borrow without using traditional lenders. Hard money lenders finance the loan based on the property in question, not on your credit score, and typically require a large down payment and short repayment schedule

Under the Real Estate Settlement Procedures Act, within three days of an application submission, lenders are required to provide in writing to potential borrowers a good faith estimate of closing costs.

A letter to a lender stating that a gift of cash has been made to the buyer(s) and that the person gifting the cash to the buyer is not expecting the gift to be repaid. The exact wording of the gift letter should be requested of the lender.

With fixed rate mortgages, your interest rate stays the same for the duration of the loan. They are often available as 10, 15, 20 & 30-year loans. The 15- and 30-year loan are by far the most popular type of home loans, accounting for about 75% of all U.S. residential mortgages.

FHA loans are part of a group of loans that are insured by the federal government. This means that instead of actually lending money, the FHA insures banks and private lenders that they will cover losses they might incur in the event that the borrower does not repay the loan in full or timely.

This is a “fixer-upper” loan, which combines the mortgage loan with a loan to help pay for repairs or updates, such as structural repairs, or energy-related updates. It is not intended to lend based off of luxury upgrades such as adding a swimming pool or tennis courts.

A guarantee by the FHA that a percentage of a loan will be underwritten by a mortgage company or banker.

Federal Housing Administration

The amount of cash put toward a purchase by the borrower.

Discount points are also known as mortgage points. They’re fees homebuyers pay directly to the lender at the time of closing in exchange for reduced interest rates which can lower monthly mortgage payments.

Debt-to-income, or DTI, ratio is a number used by mortgage lenders which is determined by the total of your debt expenses, plus your monthly housing payment, divided by your gross monthly income, and multiplied by 100. This helps lenders determine affordability based off of their available loan programs, and allows them to estimate how much you can afford to pay monthly for a mortgage.

A type of mortgage that has certain limitations placed on it to meet secondary market guidelines. Mortgage companies, banks, and savings and loans underwrite conventional mortgages.

If a buyer is having trouble getting approved for a loan, they can elicit the help of a co-borrower. This person is usually a family member or friend who’s added to the mortgage and guarantees the loan. They’re listed on the title, have ownership interest, sign loan documents, and are obligated to pay monthly mortgage payments if the buyer is unable to.

A buydown is a mortgage-financing technique lowering the buyer’s interest rate for anywhere from a few years to the lifetime of the loan. Usually, the property seller or contractor makes payments to the mortgage lender lowering the buyer’s monthly interest rates, which, in turn, lowers their monthly payments.

Instead of a traditional fixed-rate mortgage in which the owner pays on the loan in installments, a balloon mortgage is paid in one lump sum (e.g., the balloon payment). It’s usually associated with investment or construction projects that are issued for the short term and don’t require collateral.

A type of mortgage that is generally paid over a short period of time, but is amortized over a longer period of time. The borrower typically pays a combination of principal and interest. At the end of the loan term, the entire unpaid balance must be repaid.

One in which the buyer agrees to fulfill the obligations of the existing loan agreement that the seller made with the lender. When assuming a mortgage, a buyer becomes personally liable for the payment of principal and interest. The original mortgagor should receive a written release from the liability when the buyer assumes the original mortgage.

A document of opinion of property value at a specific point in time.

The total costs (interest rate, closing costs, fees, and so on) that are part of a borrower’s loan, expressed as a percentage rate of interest. The total costs are amortized over the term of the loan.

A type of mortgage loan whose interest rate is tied to an economic index, which fluctuates with the market. Typical ARM periods are one, three, five, and seven years.