The government's $8,000 tax-credit program for first time homebuyers will be ending soon, so I wanted to give you a time-line for the next couple months. In order to qualify for the tax credit, you must close before the end of the day on Monday, Nov. 30th. That day is probably going to be pure chaos, and every title office (the place where closings are generally held) will likely be booked up weeks in advance. The week before that is Thanksgiving, and lots of people are closed around then. I'm sure the title companies will have a full staff that week, but I don't know whether the mortgage companies and all the other groups necessary for closings will do so. This whole week is likely to be a mess. (And closings are never held on Saturdays or Sundays.)
There is a new law that complicates the situation. Everyone who applies for a mortgage is given what is called a Good Faith statement, an estimate in writing as to exactly what all their charges and rates will be at closing. All those numbers are put together to compute an APR number (Annual Percentage Rate, which is not the same as your quoted mortgage rate. It's the true rate, factoring in all the charges and extras as though they were part of the loan, at which you're borrowing money.)
If this rate changes at any point in the proceedings by as little as .125%, the buyer MUST be given seven days to reconsider. This means that, if the numbers at the closing table change by this much (which sometimes happens), the closing MUST be halted and cannot occur for seven days (and that's true even if the change is in your favor!) And of course if you have a closing that has to be rescheduled into that last week of November, that could be a huge problem.
Because of this, we're all trying to schedule any closings for no later than about the 16th or 17th of November. Since it usually takes 4-6 weeks to go from a signed contract to a closing, if you're trying to qualify for the $8000 tax credit you really want to have a signed contact by the first or second weekend in October, at the latest. And remember, an offer and a signed contract are two entirely different things.
Short sales often take months to negotiate. It's probably already too late to make an offer on a short sale and expect to close in time.
Bank-owned properties can takes weeks (or months) to negotiate. You might still consider making an offer on one of these, but do it very soon, and have another property in mind so you can withdraw the offer and move on to something else if the bank fails to respond in time.
Privately owned homes generally take only a day or two to negotiate, but even these can take much longer. And of course there's no guarantee that you'll be able to come to an agreement on any given offer, especially if you're looking for a bargain.
Because of all these factors, if you'd like to take advantage of the tax credit I would strongly recommend that you make an offer no later than the last weekend in September at the latest. And remember, in the current market with mortgage companies so nervous and laws and regulations changing constantly, there's always a chance that ANY contract, signed at ANY time, won't close in time. So the sooner you act, the more likely it will be that you'll end up with the $8,000.
Call me today (815-761-7918) to see available properties and get in the door before it closes on the tax credit.
Diann Carey diann.carey@bairdwarner.com 815-761-7918 (cell)
www.foxvalleyhomesonline.com