Just a week ago real estate agents and brokers were scrambling to help home buyers meet the government's April 30 deadline to take advantage of federal tax credits for home buyers. Unfortunately, completing the contract is just the first step. In order to cash in on the $8,000 tax credit for first-time home buyers and $6,500 credit for repeat buyers, realtors will need to prod buyers to lock in their mortgage financing and close before the program terminates on June 30. The clock is ticking and without a little helpful advice from their real estate agent, some buyers may miss the deadline and lose out. Home purchases that don't close by the deadline will net home buyers zero at tax time. For some buyers, loss of the federal tax credit could be a deal breaker.
Realtors who want to realize a commission from a hard-earned sale may need to step in and help their buyers connect with loan officers. Tougher underwriting standards implemented in the wake of the recent real estate/mortgage industry meltdown that sent the economy tumbling has made it harder for even folks with decent credit ratings to obtain home loans. Add to that industry confusion over new federal disclosure regulations, what they require and how to meet them and you have a potential disaster lurking in the shadow of the looming June 30 deadline.
It was pretty tough to dot all the "i"s and cross all the "t"s when you had 45 days to close a real estate deal, as was the case before the economic meltdown. These days most banks need a minimum of 60 days to close. As the clock ticks down below 30 days, closing home purchases in time to meet the federal deadline could become impossible. There are things realtors can recommend to home buyers to improve their chances of closing by the deadline:
- Provide the lender with complete information and full documentation up front, including income, tax returns, assets, reserves, down payment source, etc. To speed the approval process, document every figure.
- Make sure the appraiser doesn't submarine the deal by low-balling the home's market value by including foreclosures in his computations.
- Expect heavy volume as the deadline approaches to create snarls at title, escrow and settlement firms. Larger firms may be able to guarantee loan closing dates.
