Time is running out on the $8,000 first-time home buyer tax credit, but eligible home buyers can still get the credit if they act quickly.
"The home purchase has to be completed on or before Nov. 30 in order to be eligible for the credit, so the timing is extremely tight," said HBA President Bob Goucher. "But there is still time for a qualified buyer to get a home under contract and close on it before the deadline."
The credit, which was enacted in February as part of the American Recovery and Reinvestment Act of 2009, provides a federal tax credit of 10 percent of the purchase price of a home, up to a maximum credit of $8,000, to qualified buyers who purchase between Jan. 1 and Nov. 30, 2009. The purchaser must not have owned a principal residence within the past three years, and must have a modified adjusted gross income of $95,000 or less ($170,000 for married couples) to qualify.
"One thing buyers can do is get pre-qualified for a loan while they are shopping," said Goucher. "This will save precious time once they are ready to make an offer on a home."
It is expected that sales over the next two months will take longer than normal, as more buyers scramble to complete sales in time to be eligible.
Given the time it takes to negotiate the terms of the sale with the seller, have the home inspection and appraisal completed, schedule a settlement, and process other required documentation, buyers should plan to have a home under contract no later than five or six weeks before the Nov. 30 deadline.
Another important timing consideration is the Thanksgiving holiday that falls just before the deadline. It will be difficult, if not impossible, to schedule a closing the day before or the three days following the holiday on Nov. 26.
The credit has had a positive effect on home sales. On a national level, sales have increased for the past four months, which has been largely attributed to first-time buyers eager to take advantage of the credit. The National Association of Home Builders expects more than 1.5 million home buyers to claim the credit over the life of the program.
But if this forward momentum in housing sales stops, it could hurt the nation’s economic recovery. NAHB and other groups in the housing industry are urging Congress to extend the tax credit, to help push the economy out of the recession. It is estimated that extending the credit for another year would spur 383,000 more home sales and create nearly 350,000 jobs nationwide.
Visit www.revivehousingnow.com to find out how you can let your members of Congress know you support reviving housing and restoring America.
For more information about qualifying for the tax credit, and other resources to help you understand the process of financing and buying a home, visit www.federalhousingtaxcredit.com. For more information on the Newton County Home Builders Association please visit www.newtoncountyhba.com.