Though there are less than 70 days left to take advantage of the $8,000 federal tax credit for first-time homebuyers, would-be homeowners still have time to beat the clock.
Buyers hoping to use the tax credit must close on or before Nov. 30. To make the deadline, they need to obtain approval for a loan and start an active search for a property immediately.
“This will give them about a month to find something, submit and ratify an offer with enough time to settle,” said Market Advantage agent Danilo Bogdanovic, of Loudoun County.
Agents also recommend a consultation with a real estate professional to explain the current market and determine the risk tolerance of new buyers.
“You really want them to be aware of the types of homes available — especially foreclosures and short sales,” said Shelly Murray, president-elect of the Greater Capital Area Association of Realtors and a Weichert manager.
For instance, short sales at this late date are out of the question for first-time buyers looking to take advantage of the credit.
“It takes an average of 90 days to get a response from a bank on short-sale approval, then another three to four weeks to settle after that,” Bogdanovic said.
If buyers are going after a traditional resale or foreclosure, they should have a ratified contract in hand by sometime during the first two weeks in October — depending on the type of financing.
“Conventional financing takes about 30 days from date of ratification to process, and [Federal Housing Administration financing] takes 30 to 45 days. [Department of Veterans Affairs financing] takes closer to 45 days,” Bogdanovic added.
If you want to relax and enjoy your turkey dinner this year, arrange for a midmonth settlement and be thankful you were an early bird.
Despite the Nov. 30 deadline, all buyers should aim to settle by Nov. 15 to allow for any delays and the reality that settlement companies will be swamped the last two weeks of November.
“Remember you are bumping up against the Thanksgiving Day holiday,” Murray said. “Some banks are closed both days.”
Things can go wrong in the days leading up to closing — especially in this market.
“At the last minute, underwriters don’t like the job verifications of the people who are putting 50 percent down and the job verification is coming from the federal government,” Long & Foster agent Dotty Abt said.
Homebuyers need to build in time to deal with such setbacks and allow for sharper scrutiny of finances and appraisals that are outside of their control.
With the number of home sales up for the fourth consecutive month and first-time buyers driving a major percentage of this activity, discussions have centered around the possibility of an extension of the homebuyer credit.
“Everybody is hoping it will be [extended],” Murray said. “It helps the economy. [Buyers] paint. They buy furniture. It does contribute.”
