Tired of paying rent, and enticed by a first-time home buyer tax credit, First time home buyers are scouring the cities of the east bay for a house to meet their needs. And they are already running out of time.
The federal tax credit for first-time buyers is “a huge motivator” for these buyers, and they may end their search if the Nov. 30 deadline arrives and they still have not closed on a deal.
Timing is everything for many first-time buyers today. For those who purchase a home this year, the tax credit is for 10% of the purchase price, up to $8,000. Those who have owned a home in the past three years aren’t eligible. Buyers also have to meet eligibility requirements regarding income; the current credit begins to phase out for singles who make more than $75,000 and couples who make more than $150,000.
Unless it is extended, this credit will expire on Nov. 30. We are seeing an increase in buyers wanting to get closed prior to the tax credit closing deadline. there is also an increase in sellers wanting to get their homes on the market and closed by this deadline.
Some real-estate agents and mortgage brokers are recommending that first-time buyers close no later than the week before Thanksgiving to ensure that no holiday-related office closings or abbreviated schedules interfere with the process. That means finalizing a purchase on or before Nov. 20. In fact, to make sure you can take advantage of the credit, it’s probably best to go under contract no later than the first or second week of October.
The National Association of Realtors reports that it’s taking about two months to complete a home sale in the current market, as lenders scrutinize borrower paperwork and issues with appraisals pop up. In short, first-time buyers probably need to select a property and make an offer by the end of this month. But rushing to meet the deadline is a double-edged sword. The purchase of a home—let alone your first one—isn’t a decision that should be taken lightly.
For buyers who don’t make the deadline, there is a chance the credit will be extended. There are at least 20 bills drafted regarding the credit; one-third of them have been introduced recently. Some proposals would not only extend the first-time buyer credit into next year, but would also expand it to include all home buyers, remove income restrictions and raise the maximum amount of the credit, up to $15,000.
By including all buyers, there could be more of a ripple effect as more Americans spend money on moving vans, lawn equipment — any items or services associated with making a move. NAR has been lobbying heavily for the extension. “The first priority is going to be to renew the $8,000 credit, but we have some good arguments for expanding it,” said Jerry Giovaniello, senior vice president and chief lobbyist for NAR. He argues that the credit doesn’t cost much but has a huge impact.
There is growing Capitol Hill support for the extension of the credit. Senate Majority Leader Harry Reid, D-Nev., said it needs to be extended by the end of the year, according to a spokesman from his office. And Washington Research Group, a unit of securities firm Concept Capital, recently put the chance of extension at 60 percent.
Yet with Congress currently focusing on other issues, and concerns about the country’s rising deficit, some wonder how difficult it will be for housing to garner attention anytime soon.
If you’re a first-time buyer, however, waiting is a gamble. What you have in front of you now is a tax credit. After that, you don’t know what you have.
NAR estimates that about 1.8 million to 2 million first-time buyers will take advantage of the tax credit this year, and says that roughly 350,000 sales wouldn’t have taken place without the credit.
Planning to buy a bank owned home with a FHA loan? I recommend that you apply for the 203K loan. I am a realtor and have recently had two different clients use a traditional FHA loan. They were both planning to completely remodel the homes and so wanted to waive the inspections so they could close faster and be able to complete the work themselves, that way they would not have to pay labor expenses to a contractor. The FHA appraisers came out to appraise the homes. Both homes were in Hayward Ca., both were bank owned and there were two different appraisers. One appraiser said that since the buyer waived the termite, roof and home inspections, they would recommend to fund the loan and let the new owner complete any remodeling at their own expense. The other appraiser said that even though the buyer had signed an inspection waiver andcompleted an addendum stating that they were buying the home in as is condition, and waived all inspections including termite, roof and home inspections, the appraiser would not recommend funding until all inspections were completed and there was a roof and section one clearance. The seller (bank owned) said they would not allow any work to be completed by the buyer because of liability issues and the buyer did not want to pay a large sum of money for repairs on a home he/she did not own yet. The seller was concerned that if they put money into a home before close of escrow the buyer may walk away. A Catch 22! If we had gone with the 203K loan we could have done a hold back. The loan could fund and transaction close with escrow holding back from the seller the funds to complete the repairs. 
Buying a home