Brian Cavanaugh of Wells Fargo Home Mortgage just sent me an interesting email in regards to when to schedule your closing to take advantage of the $8000 tax credit:

The $8,000 First-Time Home Buyer Tax Credit expires November 30, 2009.  In order to claim the tax credit, the IRS requires that you’ve closed on or before that date.  December 1, 2009 is too late.

But that doesn’t mean that first-time home buyers should target November 30, 2009 as a closing date. In fact, there may not be a worse day in 2009 on which to try to close on a home.  The optimal time is during the week of November 16, 2009 and the earlier in the week, the better.

To understand why, let’s start with the fact the home sales volume is through the roof, and then we’ll look at a calendar.

New Home Sales data and Existing Home Sales data has been unexpectedly strong and first-time buyers account for nearly 1/3 of all transactions.  Furthermore, the Pending Home Sales reports tell us sales volume is still growing.

It’s reasonable to infer, therefore, with home prices still low and with mortgage rates still down, buyer interest will stay strong all the way through the November 30, 2009 deadline — especially as trade groups trumpet “The End Of The Incentive”. There will be a mini-panic as everyone tries to close in time to claim their $8,000.

This is when it starts to get messy.  Check out the calendar.

• November 30, 2009 is the Monday after Thanksgiving Weekend.
• November 28-29, 2009 is a weekend.  No closings on weekends.
• November 27, 2009 is the Friday after Thanksgiving — an unofficial holiday.
• November 26, 2009 is Thanksgiving — an actual holiday. No closings.
• November 25, 2009 is the day before Thanksgiving — a national “half-day”.

So, that backs up the November 30, 2009 first-time home buyer tax credit deadline by 6 days to November 24, 2009 — a Tuesday.

And I won’t tell you that closing on Tuesday, November 24, 2009 is a bad idea, but I’ve been in this business long enough to know that there’s always a chance for something to go wrong. And when it does, you’re going to want some sort of a cushion between the “the problem” and “the deadline”.

Maybe it will be a problem on your final walk-through, or with your mortgage loan documents.  But as the buyer of a home — the largest purchase you’ve made in your life to-date — the last thing you’re going to want is to feel pressured into signing your paperwork because of worries over an $8,000 tax credit.

Therefore, don’t mess.  Schedule your closing for the week of November 16, 2009, instead.  That way you’ll have plenty of time to work through whatever needs to be worked out in connection with your home and your home loan. With a closing set for the 16th, you’ll meet your tax credit deadline with plenty of time to spare.

That said, the clock is winding down.

If you haven’t started your home search yet or aren’t under contract, it’s seriously time to get cracking.  Purchase closings come 60-day default.  Sometimes, you can negotiate them down to 45 days or 30 days, but, for the most part, 60 days is the standard– especially if you’re buying a short sale.

Counting backwards from November 16, therefore, renders September 17, 2009 the last day to go under contract and be sure of collecting that $8,000 tax credit.

It’s a scant 24 days from now.

If you’re a first-time home buyer and just starting your research, I encourage you to call or email me directly with your First-Time Home Buyer Tax Credit questions about how the program works.  The IRS has a straight-forward form  you can read but it may not be “personal” enough to address your particular needs.

Sometimes, you need the human element, though.

If there are any questions regarding this buyer please feel free to contact Brian Cavanaugh at (617) 771-5021.

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