Wednesday, September 02, 2009

First-Time Homebuyer Credit? You May Be Too Late!

The Federal Government and the I.R.S. want to write you a check for $8,000, but you need to act now, if you haven't already missed out.

Earlier this year, Congress passed legislation to provide a tax credit of up to $8,000 for first-time homebuyers who close on the purchase of a new home by November 30. The trick is, the whole nation is going to be competing for space at the title offices at the end of that period of eligibility, which by the way, is a Monday. The Thursday and Friday before? Thanksgiving. As you may imagine, title companies will be under-staffed and over-booked. I'm advising all of my clients to plan to close no later than Friday, November 13.

But Jason, that's 2 1/2 months away. Good point, but how long does it take to buy a home?

These days, the average time from contract to close is about 45 days (six weeks). That leaves you four weeks to speak to your Realtor about finding appropriate properties, talk to your lender about getting a pre-approval, scheduling and viewing properties, writing and negotiating an offer, and getting through the attorney review period (in Illinois, and other states with a similar process). That's not a lot of time!

If you're interested in a short sale, it's too late. Lenders can take up to six months to approve a short sale, and then when they do, it still isn't a guarantee it will close. And foreclosure property purchases? That may be a crapshoot, depending on which broker is listing the home, which corporation owns it, and which attorney represents it.

The best advice? Start today, and use that $8,000 to buy your Realtor something nice! :)