Many people have taken advantage of the First-Time Home-Buyer Tax Credit, but the deadline is near for those who are still contemplating purchasing their first home.
Last February, the federal government implemented a tax credit that is equal to 10% of the purchase price, not to exceed $8,000. This money does not need to be paid back, unlike previous incentives. To qualify as a first time home-buyer, you can not have owned property for the past 36 months. You also need to be a U.S. citizen and not be purchasing property from family. The credit is available for single people with an adjusted gross income below $95,000 and for couples with adjusted gross incomes below $170,000.
To qualify for the tax credit, you must be closed and in possession of your new home by Nov. 30, 2009. That means you must be living there as an owner, not as a tenant. Your loan must be closed by that date. In most cases, it takes 30 – 45 days to close a loan. During this time, the buyer has inspections done, the appraisal is written, and the loan goes through the underwriting process. When the loan is fully approved, the buyer meets with the lender and “closes” the loan. At this point, the property is transferred to the new owner, and the buyer can move in, or take possession of, the property. Since this process takes 4-6 weeks, it gives buyers a very narrow window of opportunity to purchase a home before the deadline. Most lenders are suggesting that purchase agreements need to be in by the end of October to be able to make this deadline. HOME Real Estate is adding a first time buyer’s addendum to their contracts, stating that although every effort will be made to close prior to the Nov. 30 deadline, there are factors that may prevent this from happening, and that it does not make the contract null & void.
There have been rumors of an extension, but as of this writing, nothing has been confirmed. It is a great opportunity that may never happen again, so if you are contemplating purchasing a home, there may never be a better time to do so. Interest rates are hovering right around 5%, depending on your credit score. This combined with the reduced home values and a potential tax credit makes it an ideal time to buy. But, you need to hurry, before it’s too late!