When is the Best Time to Close on a Las Vegas Home?

By guest blogger Jamie Cailor

We all have probably heard that it is better to close Las Vegas real estate transactions at the end of the month as opposed to mid-month or early on in the month. In fact, many borrowers are under the mistaken impression that they can save money on interest if they close later in the month.

Closings are more often scheduled for the end of the month than any other time for two reasons:

1. An offer to close by month end is more attractive to the seller as it “saves him” having to pay another mortgage payment out of pocket.
2. From the buyer’s perspective, it reduces the amount of cash needed to close in prepaid interest.

In realty, no one is actually saving any money. Las Vegas mortgage interest is paid in arrears – in other words, after you have used the money. The seller will still owe the interest from the previous month, but instead of writing a check, the amount will be deducted from his proceeds. The buyer will still be paying the interest for every day he has the loan, he just doesn’t need as much money up front. So total cost is not so much the issue as having the out of pocket cash to meet the requirements to close.

What is prepaid interest anyway? Well, prepaid interest is essentially the amount of interest due at closing to cover the period of time in the month between the date the mortgage lender closes your loan and the date your first payment is due. Say you close your loan on October 1st, paying 30 days of prepaid interest at closing. While you’ll have to pay that interest upfront, your first mortgage payment won’t be due until December 1st.

However, if you close on October 30th, and pay only one day of prepaid interest, your first mortgage payment will be due December 1st, so that first full mortgage payment will come due sooner. Either way the same amount of interest will be paid - it’s just a matter of when you pay it. But the difference in closing costs can be significant for first time home buyers strapped for cash to get into their new Las Vegas homes. So many homeowners opt to close at the end of the month to reduce their upfront closing costs.

Smart mortgage brokers will typically disclose enough prepaid interest for 15 days or more on the Good Faith Estimate to ensure borrowers have enough money to cover the costs no matter what day the loan actually closes. It’s not always easy to time a closing as “life happens,” so it’s better to overestimate, especially if you’re cutting it close with limited funds. The last thing a borrower needs is to be short on funds at the tail-end of the funding process.

And there are definite disadvantages to closing at the end of the month too. This is always a frantic time for title, escrow companies and lenders, as more than 60% of all contracts are written to close between the 25th and the 31st of each month. But there is NO guarantee that the loan will actually close at that time, and you may be out the prepaid interest anyway. Too many things can happen that delay an escrow. The homeowner’s association doesn’t submit the payoffs for the previous owner in a timely manner, the underwriter asks for more conditions at the last minute, there are mistakes on the final loan documents that need to be corrected, a Las Vegas foreclosure property might not receive final HUD signoff, the title company finds a lien or judgment has just been filed… The list can go on and on. In addition to that, other service providers, like moving companies, rental trucks and even utility companies are also jammed at the end of each month, and you may find it difficult to get the services you need.

On the other hand, if you plan your funds in advance and can close early in the month or mid-month, you’ll have a lot more time devoted to your loan documents and closing packages and it may be cheaper to rent that moving van. Plus even if something happens at the last minute that could cause a delay, the escrow officers and lenders will have more time to expedite your transaction as much as humanly possible.

All that said, perhaps you shouldn’t be looking at Las Vegas homes for sale if the amount of prepaid interest can make or break you. So be sure you have sufficient funds regardless of whenever you close your loan.

The Ultimate Las Vegas Party Home!

As a Las Vegas real estate agent, I have seen some really cool houses over the years. (I have thousands of great ideas I would love to try out if only my pocketbook matched my dreams.)

But Friday was extra special. I got to see a home that was 25,000 square feet of pure unadulterated Man Cave. No, that is not a typo. The home is really 25,000 square feet and is listed for $12M, which is actually an incrediblly LOW price per foot for the neighborhood and the amenities.

Anyway, one of my agents was previewing for a client that is coming to town, and she happened to ask if I would like to go with her. Usually I have to say no because I am always so slammed at work, but for once I decided to play "hooky" and tag along.

Like I said, I have seen many exclusive Las Vegas homes over the years, but this one was something else. It is located in McDonald Highlands, an exclusive gated country club community in the Green Valley Ranch area of Henderson. The property is still under construction on one acre (though the acre next door is also for sale - it is a Las Vegas bank foreclosure - and could be purchased at the same time), and it is just across the street from Rich McDonald's home - developer of McDonald Highlands.

Even unfinished, this home has loads of personality. The owner/contractor met us and gave us a personal tour and we were blown away, especially by the "play" areas of the home. Just a few of the indoor amenities in the family room included:

• ten car garage with glass viewing window from the family room so your guests can see your Bentley and Rolls without getting up off the couch
• 30 person professional theatre room with stage and dressing room for private plays
• wall length aquarium with built in TV screens that rise up within the tank so your exotic fish can enjoy HBO or Showtime along with you
• raised dias for band or DJ for your parties
• full size kitchen (that is bigger than the one in my home)
• game station area with two screens for competitive Wi matches
• full size state of the art gym
• spa room with two pedicure chairs, perfect for a girl party
• two lane regulation Brunswick bowling alley
• extra room for either your shooting range or golf practice range

The gigantic pool area was also spectacular, with swim up bar, outdoor kitchen, cascading waterfalls, bridges and multiple outdoor seating patios. Above it sits the "Poker Room," encircled by a true "lazy river" for drifting along in your innertube on a hot summer's day.

And of course the rest of the home is packed with fabulous and one of a kind ceilings, countertops, floor coverings, etc., all in very contemporary design with floor to ceiling windows and hundreds of planters scattered throughout. For the money, this may just be the best value in Vegas, and for sure it will be the most fun!! So if you are looking for the ultimate party house, give me a call and we'll go take a look.

Las Vegas Real Estate Foreclosure Auction in October!

Hudson and Marshall is back with a new auction of 153 properties in the Las Vegas Valley! This will be by far the largest auction they have held in more than a year. Auction properties will include every type of Las Vegas real estate, from small condos to single family homes to luxury high rise residences. The auction will be held at the JW Marriott hotel at 1 pm on October 9th, and auction properties will be held open for viewing the previous weekend on October 2nd and 3rd from 1 pm until 3pm.

In addition, early viewings and pre auction bidding are available through your Las Vegas real estate agent, and you should choose an agent that is thoroughly familiar with the auction process. Auction properties do NOT list prices, and your agent will need to do a lot of research to come up with an appropriate bid amount. Your agent’s commission will be paid by the seller and there is NO cost to the buyer. Since the auction house only looks at the highest bid, whether or not the buyer is representing himself or has an agent, it pays to have an experienced auction agent at your side!

One thing to keep in mind on auction properties is that there is a 5% buyer’s premium that will be added to the winning bid amount, so a Las Vegas home that goes for $150K will actually cost the buyer $150,000 plus the $7500 buyer’s premium in addition to normal buyer closing costs. Offers cannot be made with any kind of contingencies, including inspections, appraisal or financing. Escrows must close within 30 to 45 days, and on the day of the auction, successful bidders will be required to present a $2,500 non-refundable cashier's check as earnest deposit. (Many auction properties CAN be financed, as long as your lender can close within the stated time period.)

To receive a complete list of auction properties being offered, please contact us at sold@greatlasvegashomes.com and we will be delighted to send you the auction brochure.