If you’re closing on your home this June, you may be eligible for the federal home buyer tax credit.
June 30th is the closing deadline for this tax credit, so there will be a lot of people trying to close on their homes. That means some serious volume at your local lender, with underwriters who are struggling to keep up with all the loan approvals.
Long story short: there might be some unlucky home buyers who try to close in time for the tax credit, but end up slipping into July. You don’t want to be one of those people.
We put together a list of tips for our clients who are trying to close in time to qualify for the tax credit. Here’s what we came up with:
- Have all of your mortgage approval documentation ready. Put them in an easy-to-transfer electronic format, such as PDF. Keep these files ready on your desktop, a zip drive, or uploaded to an email account. This documentation includes: pay stubs, W9s, tax returns, bank statements, employment letters, stock positions, ID, and any other information required by your lender.
- Make sure your bank has ordered and processed your appraisal. Also, be sure that your loan file is in process with underwriting. An appraisal can take anywhere from a few days to over a week and no loan is ready to close until it has been approved by your lender.
- Contact your loan officer and attorney daily. Be a “squeaky wheel” to get your loan closed. This is also true for your attorney, as he or she will be in close contact with the seller’s counsel.
- Keep your agent in the loop. It’s your agent’s job to keep the process moving and to look out for your best interests. If your agent is napping on the job, nag them. Nicely. But nag them.
- Move your money around now, and do not take out any new lines of credit. No new loans, no new cars, no new credit cards, and no new major purchases. New credit = changes to your credit score. Changes to your credit score = your lender’s underwriter starting all over again. The underwriter starting all over again = bad.
- Schedule your closing as soon as possible with your attorney and the seller’s counsel. To increase your chances of getting your purchase on the books that day, have your closing at the registry and as early in the morning as you can arrange. As the buyer, you have the right to be firm and direct about this requirement. If you are closing during the last week of the month — especially if you are closing on the 30th itself — this is a must do.
- Perform your final walk through at least 2-3 days before closing. Make sure everything that was supposed to be fixed post-inspection was actually fixed. Also, make sure no new damage popped up in the meantime. This is especially critical with FHA loans, which can be rejected unless the FHA’s standards of livability are met. For example, we’ve had clients who needed to paint a set of stairs or replace rotted wood before their FHA loans were approved. Not the sort of thing you want to be doing on June 29th.
- Stay calm and collected. With a little planning, attention to detail, and teamwork with your agent, you should have no problem closing in time to claim the tax credit.