Heather recently reminded us the $8,000 tax credit for first-time buyers is currently set to expire on 11/30/2009. This means you need to CLOSE ESCROW, with a HUD-1 Settlement Statement showing your closing date, by November 30th.
Photo credit to Stockxpert Woodsy.
Let’s work backwards from there to see when you need to be under contract on that new home you’re going to buy..
A typical escrow period is 30 days, meaning it generally takes 30 days from the time a contract is accepted until the escrow closes and the new owner takes possession of the home. Therefore you’ll want to open escrow by October 30th in order to hit your deadline, right?
Well, lenders are busy right now, and FHA appraisers are even busier. Most lenders we’ve worked with are recommending 40-45 days as a safer bet. Hmmm, that puts us back to Mid-to-late October.
Personally I foresee a couple of speed bumps ahead: Thanksgiving Weekend (with mortgage companies not open and individual lender-employees taking personal time off for travel/company), and a HUGE NUMBER of loans all trying to close at the same time (in order to hit the tax-credit deadline.)
Because of these obvious speed bumps, I’d recommend having a 1-2 week buffer in there. That pushes our timeline forward to early-to-mid October for a safe contract date.
Now add in the fact that many homes in the first-time buyer price ranges are seeing heavy competition with multiple offers, and that many first-time buyers are having to write offers on multiple homes before getting a contract accepted, and the timeline gets pushed forward even further.
Basically, if the $8,000 tax credit is of primary importance in your reasoning to be buying a home this fall, you should be out looking at homes and ready to make an offer… NOW! (or at least Very Soon!)
Your helping as many first-time buyers get free IRS money as he can Realtor,