Free money is something no one wants to turn down. And with this perfect combination of low prices, lower interest rates, and now the tax credit, buyers are out in droves. Perhaps you have bid against them for the same property. There is something very important to consider as we draw nearer to the deadline of November 30.
What! Near the deadline! I still have a few months to find a house!
No, not really. Many buyers and their agents are not taking into consideration a few very important factors. I feel the truth is better than the harsh reality of missing the boat. So her it is.
1. FHA appraisals. If you are going to go with a FHA loan (3.5% deposit), that once you find that dream home and are "under agreement," the house will need to be appraised by a FHA appraiser. Back in the day where every loan was a FHA, the typical closing period was 4 months. Whlie we are not seeing this yet, there is a backlog occurring in the system as we speak. Appraisals are taking weeks to get reviewed by the underwriting staff which means moving forward as we approach the deadline and everybody wants to close by Nov 30, the backlog will continue to increase along. This means it could potentially take 2 months at least to reach the closing table from contract signing.
2. Not every house is a foreclosure. We are seeing an abundance of short sales and of course, owner occupied homes. What is the seller needs to fins a place before he can close in his. Or what if the short sale takes months to get approved by the bank. These factors could knock you out of the Nov 30 deadline to close and qualify for the 8000.00 Tax Credit.
Now, will the tax credit deadline get increased. That is a possibility but do you want to take that chance?
The best solution and what I am advisign my clients is to be in contract on a property NO later than Sept 15. Anything beyond that for a FHA, rehab, or USDA loan is way too close for comfort and a guarantee to close on Nov. 30.
If a sellers agent asks for you to wait for the sellers to find a house, you should give them until the end of August to close in the event things don't go smoothly such as inspections on both houses, appraisals, and mortgage contingencies. There are too many pieces of the puzzle that have to fit perectly in this time frame to cut it too close.
If it is a short sale you are after, have your agent ask some very poignant questions about the lien holder, whether it is approved, who is handling the short sale and how experienced are they, and be sure to give a firm deadline to close.
Elise Vetri is considered an expert in Buyers Representation with Keller Williams Realty No RI, Lincoln, RI
She can be reached at 401-766-0128 or elise@elisevetri.com