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 daily. Be a “squeaky wheel” to get your loan closed. The squeaky wheel gets the grease, and in this case the grease happens to be worth several thousand dollars.
- 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. You won’t be able to schedule closing until you get the final underwriter approval from your lender. Your lender should tell your agent as soon as this happens, but don’t take any chances — call your agent to make sure the info went through. Once you have underwriting approval on your loan, work to get your closing date set as early as possible. You want to have at least a two-day buffer before June 30th, but a week is even better.
- 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.