14 October 2009

Deadline Soon for First-Time Homebuyers

Realtors, Mortgage Lenders say contracts need to wrap now to qualify for tax credit. by Stephen Maloney

Time is running out on the federal tax rebate for first-time homebuyers as the Dec. 1 deadline rapidly approaches, but real estate experts agree it's almost too late to begin the homebuying process and hope to qualify for the rebate of up to $8,000.

Essential Mortgage Co. President Mike Anderson said first-time homebuyers who haven't yet started negotiating a final price on a home are pressing their luck.

"You'd better get in contract by Oct. 15," Anderson said. "You better allow 45 days to get everything finalized. It can be done in 30 days, but I'll tell you what, you better have your ducks in a row."

Anderson said he closed a deal from start to finish within two days last year, but the regulations entacted by the federal government to avoid another housing meltdown have slowed the process considerably.

"We have a whole bunch of different waiting periods now," he said. "You can't hold an appraisal for three business days, you have the Home Value Code of Conduct with its own waiting periods. Things are just taking longer."

Realtors nationwide are asking Congress to extend the program for at least another year, Anderson said, but there is no indication yet whether the lobbying efforts are working.

The incentive itself, however, has attracted first-time homebuyers so far.

Metairie-based Re/Max Real Estate Partners agent Tom French said the tax rebate was the deciding factor in a home sale he put years of effort into closing.

"The first one I closed on I had been working on for three years," French said. "The night that Congress approved this program he sent me an e-mail and said, 'Ok, now it's time to get serious, let's buy that house.'"

That customer figured out exactly how much of a rebate he would qualify for and already had a purpose for the money in mind before he signed the contract, French said.

"He had it all planned out," French said. "When we did his closing he said, 'That tax money is going to be new flooring in this house.' For him it was a big incentive."

Covington-based Stirling Properties vice president Barbara Shelton said more than 350,000 first-time homebuyers have taken advantage of the rebate program since its inception Jan. 1, leading to a potential backlog of paperwork as the final deadline to stop accepting applications nears.

"You're going to be crunched by the end of November with all the delays we're having if you don't hurry up and get things under contract now," Shelton said. "The biggest holdup is underwriting."

Anderson said loan applicants should be prepared to produce a wide array of documents to loan officers or expect delays.

"I would have two years' federal income tax returns, two months' bank statements and your two most recent pay stubs," he said. "If you were in college, get your school transcripts and copies of your diploma. These are the kinds of crazy things we're asking for today."

The college transcripts are looked at as proof that a recent grad is responsible enough to attend class and are analogous to a good work record, Anderson said.

Obtaining the transcripts may take up to 14 days, though, so applicants should be prepared well ahead of time, he said.

"If you're looking at the process starting from making the offer, you need to be doing that right now, in the next week or so," Shelton said. "We're already in October,so time is really running out."

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