As it stands right now, if you want to take advantage of the (up to) $8,000 tax credit for first time home buyers, you have about 6 weeks left to find a home, make an offer and have it accepted.
“But Jay, the credit is good through November 30, 2009. That’s 3 whole months!”, you may be thinking.
Not so fast Sparky. To take the tax credit you have to close on a home by November 30. Close as in transfer of ownership has to be complete, recorded with the appropriate legal entity. Closed as in you have the keys to the new home in one hand, and are carrying house-warming party invites in the other.
Typical time from offer acceptance to close is about 30 days. I’ve seen cash deals close in 4 or 5 days (how many first time buyers can write a check for a home?) and I’ve seen traditional financing transactions close in as little as 12 days. But that was “back in the day” and lending guidelines are vastly different now.
You need to allow yourself plenty of time to close on a home sale. Things can go wrong swiftly once an offer is accepted:
- There can be problems uncovered during the inspection period.
- The appraisal can come in low.
- Your loan underwriting can get delayed for a myriad of reasons.
- Loan funding can be delayed.
- There could be a cloud on the title that has to be cleared.
A good agent tries to foresee all the potential pitfalls and nip them in the bud, but things can arise that are beyond anyone’s control.
The more time you can allow, the better.
We recommend being under contract by October 15 just to be safe.
At the time of this writing, there are no less that five bills in the House and Senate to extend (and even expand) the tax credit. All have been stuck in Committee for weeks. So if you really want to roll the dice and live on the edge, you can hope the tax credit gets extended, or scramble like mad with a sub-30 day close.
Just be prepared to hit the Jack Daniels heavily if you guess wrong and close on Dec 1, leaving a refundable $8,000 tax credit on the table…
Here’s a clip of a CBS5 News segment that features one of our first-time homebuyer clients, Katie Fulkerson, with a cameo appearance by yours truly. They cut one of the most important things Katie said – while the tax credit is great, it shouldn’t be the primary reason for buying a home. Don’t buy something that’s not what you want just to score an extra $8K…
Photo Credit: Robbert van der Steeg on Flickr. Creative Commons License
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Is there any possibility with the current state of the economy especially the housing market that the $8000.00 tax credit will be extended for anlther year.
I think it's entirely possible the 1st time homebuyer credit will be extended. But it's the government, so I sure wouldn't plan on it… As mentioned in the post, there are at least five bills floating about Washington to extend, and even expand the tax credit.
Lower interest rate and less amount paid while paying mortgage payment will keep the market healthy. The market was down early in the year and now it is recovering and I think it will be stable very soon. Visit http://www.lonestarfinancing.com/mortgage/texas... for San Antonio Mortgage Companies.
Good reminder! I've had plenty of real estate buyers in Washington, DC, not realize that they need to close by Nov. 30.
Congrats on the media coverage!
We've got 1st timers scrambling to get a house on the NW side of the Valley ourselves. Fingers crossed, we'll get 'er done. Just like Katie & you, we're looking at bank owned homes, dealing with bidding wars, offering list price or more, and even actively seeking out “traditional” sales (i.e. not short sales and not bank owned). Traditionals are few and far between but sometimes can be just the thing the buyer needs, wants and falls in love with.
Good point. People need to be reminded that the tax credit ends, and they can't go out the day before and expect it to work. Buying a home is not like saving 40% off at your local department store.
Some careful planning is necessary at this point to seal that deal!
The points you make are perfect. I could not agree with you more. If buyers are going to take advantage of the tax credit, the time to be serious is now. There are many things that can slow the process up. Buyers should give themselves plenty of time to ensure that things will get done on time.
Well this direct reduction in tax liability will really help the banks to recover the amount that they loss in sub prime mortgage . . .
Well this direct reduction in tax liability will really help the banks to recover the amount that they loss in sub prime mortgage . . .
Austin Hard Money Lender
Your last sentence is the most important. We are working with several first time home buyers who got off the fence because of the tax credit. But what they are looking for is unique and not available very often. I would much rather they wait and find exactly what they want than buy something to get $8,000. I am not interested in any of my clients having buyer's remorse!
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Looking good Jessica!
Great Points! This is a fantastic opportunity for 1st time home-buyers so don't procrastinate. The Indianapolis first time home-buyer market is strong thanks to the tax credit, so hopefully it will be extended, but we can't count on it.
There's no way they actually let the first-time homebuyer tax credit expire this year…I think it's gonna be a permanent fixture, at least through the crisis…why would they pull something like that mid-crisis? Hell, nobody wants to lower home prices, so there's no other way to “increase affordability.”
The tax credit is good for the economy? REALLY? I don’t think so guys common now. Think about it, when the tax credit ends now or next year doesn’t matter because we’ll still be in the same position with the down economy. Bankers that were lending money to anyone is no different than a tax credit nor is it different than a bailout or cash for clunker. The taxpayers as a whole from coast to coast are paying for this behavior. Listen, you can’t borrow or promote your economy OUT OF A SLUMP. Look, when all the promotions are done, guess what? WE’LL BE IN THE SAME PLACE WE WERE GOING TO END UP AT IN THE FIRST PLACE! The economy MUST fix itself to truly regain strength. Our government so ruined this economy over the last 20 years from borrowing left and right and now citizens think that a first time home buyer tax credit will do the trick. Are people actually thinking a tax is a good thing? HAHA. Go somewhere that believes in redistribution of wealth tax credit buyers. I am ashamed of all who have used this tax credit thinking the government is actually helping you out. I own a small independent brokerage and have not worked with any buyers looking to purchase and claim the large tax credit. So when does our newly found soviet economy turn around…if we are lucky? Welcome to year 2100, assuming the USA takes on zero debt starting now.
The tax credit is good for the economy? REALLY? I don’t think so guys common now. Think about it, when the tax credit ends now or next year doesn’t matter because we’ll still be in the same position with the down economy. Bankers that were lending money to anyone is no different than a tax credit nor is it different than a bailout or cash for clunker. The taxpayers as a whole from coast to coast are paying for this behavior. Listen, you can’t borrow or promote your economy OUT OF A SLUMP. Look, when all the promotions are done, guess what? WE’LL BE IN THE SAME PLACE WE WERE GOING TO END UP AT IN THE FIRST PLACE! The economy MUST fix itself to truly regain strength. Our government so ruined this economy over the last 20 years from borrowing left and right and now citizens think that a first time home buyer tax credit will do the trick. Are people actually thinking a tax is a good thing? HAHA. Go somewhere that believes in redistribution of wealth tax credit buyers. I am ashamed of all who have used this tax credit thinking the government is actually helping you out. I own a small independent brokerage and have not worked with any buyers looking to purchase and claim the large tax credit. So when does our newly found soviet economy turn around…if we are lucky? Welcome to year 2100, assuming the USA takes on zero debt starting now.
The first time home buyer tax credit should be extended. Here are my top seven reasons why: The Top 7 Reasons the $8,000 First Time Homebuyer Tax Credit Should be Extended http://bit.ly/9FKNQ
I read ( http://www.savingtoinvest.com/2009/02/15000-fir... ) that the first time home buyer credit is being extended to 2010 and up to $15K. Any idea when this will be confirmed?
buying a home
for living or
buying investment property is take many consideration on location, personal
job area, affordable loan repayment …etc. Thanks for your reminder to all the home buyers.
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