If You Are Counting On Taking Advantage of The Home Buyer’s Tax Credit, It Is Now Officially Crunch Time
It is looking like March Madness is about to give way to April If this was a 
basketball game, we would be getting close to the two minute mark. Desperation hasn’t set in yet, but you need to have a plan and you need to execute it quickly. There is just over a month left to find a home and get a contract together. You don’t have to close on the home by the end of April. You have until the end of June to get the financing together and close. So this is the time to take note of where you are and what still needs to be done to make sure you can take advantage of the tax credit.
The Home Buyer’s Tax Credit is broken into two parts, a tax credit of $8,000 (or 10% of the purchase price if under $80,000) for qualified first time home buyers, and a maximum tax credit of $6,500 for qualified move up home buyers. This isn’t the only reason to buy – home prices are the lowest in years, mortgage rates are still low and you can still buy with a low down payment. But if you have already made the decision to buy a new home, this tax credit is a kicker. There will still be a lot of good reasons to buy a home after the tax credit expires, but it is worth the effort to move up the search if you can get a check for buying now.
So, do you have a plan in place for getting a contract together by April 30th? Here are some things to watch out for:
Have you been pre-approved for a mortgage?
This is the first step. Without a pre-approval you don’t know how much of a home you can qualify for, or what the best way to structure the purchase. If you haven’t done this, your next call should be to a good loan officer who can help point you in the right direction.
Are you working with a Realtor?
A lot of people start their home search on the internet. There are plenty of sites where you can search for homes, and this is a great way to get a feel for what is available. But when you are serious -and remember, we are at the two minute mark – this is the time to find a good Realtor who can help guide you into the home that is right for you. A good Realtor will save you time and aggravation, and will help you get a better deal.
It might be time to give up on short sales
If you have been looking for bargain properties and concentrating on short sales (homes selling for less than their mortgage balance where you need to get the bank to agree to take less), or if you have an offer on a short sale which has dragged on for too long, it might be time to cut and move on. Short sales take longer to complete, and until the bank holding the loan signs the agreement, you have no idea when, or if, the transaction will come together. (New rules on short sales go in place next month, but it’s still unclear how they will work).
Don’t wait until the last minute
A funny thing has been happening lately in the housing market. Homes are getting multiple offers. This means two or more buyers are bidding at the same time, which pushes the price of the home higher. This isn’t happening on all homes, but on homes in the first time home buyer price range it is becoming a common occurrence. If you wait until the close to the end of April, this is likely to be a bigger factor. Another thing to consider is the property condition. I’ve seen a lot of homes that went under contract but fell apart after the home inspection. If that happens it is discouraging anytime, but if it happens at the end of April, this means you don’t have time to find a new home before the tax credit deadline.
Are you a move up buyer?
If you are a move up buyer and need to sell your house first, the clock is ticking faster for you. If you don’t have your home on the market, priced right and ready to go, you may not be able to find a buyer before the April deadline. You don’t have to have a buyer for your home lined up before the April 30th deadline, but it will make the process a lot easier and more certain if you do. One possibility if you are getting close to the deadline and still haven’t sold your home, is to write your purchase offer contingent on the sale of your current home. A lot of sellers won’t accept a contingent contract, but if you can show that your home is listed at a realistic price and is salable, this could work. You will still have to sell your home by the June 30th deadline, but this does buy you some more time.
If you are already moving forward, know what you can afford and have an idea of what type of home is best for you, then you are probably in good shape. If you haven’t gotten that far, you need to play catch up, and that can be more stressful, but you still have time to find a home on time. If you don’t have a contract by the end of April, it’s doubtful that the government will extend the program again. But there will surely be a lot of great homes on the market, and it will still be a strong buyer’s market. There are sure to be bargains later in the year, but if you can get the home you are looking for and a check from the government too, this is a slam dunk.
Thinking of buying but not sure where to start?
First Time Home Buyer Webinar this is a recording of a webinar I did recently which goes over the entire home buying and mortgage process in just under an hour.
Free Home Buyers Guide – From A to Z, everything you need to know about buying a home and getting approved for a loan.
Peter Thompson 630-479-6424
Illinois Mortgage Rates First time home buyer loans
Chicago Mortgage Company