Home Buyers Race Against Tax Deadline
WASHINGTON (
) --There are 11 weeks left to take advantage of the $8,000 tax credit for first-time home purchases. But the Nov. 30 deadline may be approaching way too soon for potential buyers.
First-time homebuyers, on average, take 12 weeks to search for a home, according to the National Association of Realtors. As if that fact alone doesn't mean you are cutting it too close, closing can take up to 60 additional days,
A "beat-the-clock" message, along with an update on the federal incentive, was posted on Realtor.com last week. First-time buyers were responsible for one-third of all home purchases in July.
Consumer surveys show the tax credit was a primary motivation for almost 11% of buyers, according to the organization. About 1.14 million people have already filed for it.
The association's affordability index climbed 36 percentage points in July from a year earlier. That means median-income families can allocate 15.8% of their gross income to mortgage payments, less than the traditional allowance of 25%. Interest rates also remained low at 5.22% in July for a 30-year fixed rate loan.
The national median home sold for $174,100. Factoring in the tax credit, the trade group says "affordability this year is at its highest level in 28 years."
The association has offered advice for homebuyers trying to beat the deadline.
Appraisals can cause delays, so make sure the lender can deliver it on time. A loan won't be approved if it doesn't appraise for the agreed price. If the property doesn't initially appraise for the bid price, ask for an additional desk appraisal.
Closing can also slow down the process. Try to get your insurance company and the homeowner's association, if applicable, to forward a cost estimate to the escrow company early. This will make it easier for them to more accurately estimate your closing costs, which in many states must be paid in cash at closing.
In surveys, 35% of first-time buyers said the mortgage application and approval process was more difficult than they expected. Research potential lenders early on, and organize your pay stubs, bank statements and tax returns so you'll be ready when it's time to apply.
-- Reported by Joe Mont in Boston
.
