5 Tips on How to Take Advantage of the Home Buyer Tax Credit Before Time Runs OUT!!

The homebuyer tax credit can deliver meaningful savings, but only for those who have a binding contract to purchase a home in place on April 30, 2010. With that deadline bearing down, potential buyers who want to capture the tax credit had better get serious about home shopping. It is possible to find a home and get it under contract in a month or less. But it will require intense focus on the part of both the buyer and the buyer’s real estate agent.

Two versions of the tax credit are still being offered; 1) a maximum credit of $8,000 for first-time buyers (and those who last owned a home 3 or more years ago), and 2) a $6,500 credit for current homeowners. Either way, the credit applies only to the purchase of a new principal residence costing $800,000 or less (there are also income restrictions and other limitations, including a requirement to close the sale before July 1st).

Buyers eager to capture the tax credit can streamline their home shopping by utilizing these 5 fabulous tips!

1. Get to Know Your Market.

Buyers can learn more about their market through using Internet sites which permit you to see the homes currently on the market, and by finding a good real estate agent who is ready to expedite the shopping process. A capable agent can guide buyers through the home search process and save them a lot of time. New listings can be emailed to buyers as they are posted. Buyers can then check on the market on a daily basis. They will be made aware of what properties are coming onto the market and which ones have sold.

2. Line Up Your Financing.

Talk to your banker or another reputable lender right away to go through the pre-approval process. This will tell buyers quickly how much they can borrow. At today’s extremely low interest rates, that amount may be more than most buyers imagined. But either way, the process will help buyers determine how much they are willing and able to spend on the home.

3. Start Narrowing Your Search.

With a large inventory of homes to choose from in the current market, buyers won’t have time to look at everything in their price range. By establishing specific criteria of the home they want, buyers can eliminate homes that won’t fit their needs. If you can tell your real estate agent where you want to live, and how much you can invest, you should be well on your way to a successful home search.

Buyers should factor in their daily commute. Few of us want to be more than 45 minutes from work. If buyers need access to public transit, then that also shapes their choice. And if they have children, schools are going to be a factor. Ideally, you can narrow your search to one or two communities rather quickly.

4. Keep Things in Perspective.

As nice as it may be to get the tax credit, don’t let the desire to do so completely control your home search. Some buyers are quick decision makers, and others aren’t. If you like to think over important decisions, take the time you need. The tax credit is a great incentive, but an $8,000 credit equals just 2.5% of the price of a $320,000 home. Buying the wrong home can end up costing you a lot more.

5. Leave Time to Handle Standard Contingencies.

The typical purchase contract may have several contingency clauses, for such things as a home inspection, attorney’s approval, obtaining financing and even the sale of the buyer’s current residence. Fortunately, standard contingencies in a contract won’t prevent it from qualifying for the tax credit. But, the more contingencies you have in a contract, the greater the risk that it won’t close. For example, if an issue arises in the home inspection, and it can’t be resolved, the buyer may want to find another house, but doing that after April 30 will mean losing the tax credit. Allowing time to work through the contingencies before the deadline reduces that risk.