Time May Be Running Out to Get Home Buyer Credit

September 14, 2009

Barring a last-minute extension from Congress, first-time home buyers aiming to take advantage of an $8,000 federal tax credit are running out of time to get a deal in place.

With the time it takes to arrange financing, inspections and the other steps that go into closing a home purchase, home buyers should have a contract no later than the end of October, but preferably within the next few weeks, local real estate agents and lenders say.

The deal has to be completed no later than Nov. 30 to qualify for the credit.

Agents and bankers say they expect they’ll be able to handle the anticipated added workload without delays, but that buyers shouldn’t chance it. Most advise having a home under contract by Oct. 15.

“We are doing purchase loans in under 30 days right now,” said Sharon Decker, director of mortgage lending for Fifth Third Bank. “But if there is a big surge (in applications), all the lenders will be behind the 8-ball.”

The market for lower-priced homes in Louisville has already seen a surge and the final days of the housing credit could bring a wave of last-minute buyers making offers for starter homes, said Jan Scholtz, president of the Greater Louisville Association of Realtors.

After being outbid on two houses, Gina Scarpino, a 24-year-old hair stylist, recently found one in Schnitzelburg. With someone else making an offer the same day, she agreed to pay $124,000, less than $1,000 below the seller’s asking price.

“It was actually super-difficult because everyone was looking to buy a house with the tax credit,” she said. “They are being snapped up.”

But while the market for starter homes has improved because of the credit, it’s rarely come to bidding wars, said John Oldfather, Scarpino’s real estate agent. He noted there are still more than 3,800 listings for houses priced from $75,000 to $200,000 in Louisville, as of Monday. “And we don’t have that many buyers in the market,” he said.

The $8,000 credit is available typically to first-time home buyers, but can also be used by anyone who hasn’t owned a home for at least three years prior to the purchase. As a credit, the buyer’s tax bill is reduced by $8,000; buyers whose tax bill isn’t that big will collect the money in the form of a government refund.

Source: Courier Journal

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Written by djumper · Filed Under Real Estate Blog