AVOID FIRST-T9ME BUYER PITFALLS

Because of the crunch to get all the first time buyer closings scheduled before the November 30 tax credit deadline, we are advising that scheduling closings on the last few days of November be avoided if possible.

The November closing calendar is complicated by the fact that the 30th is a Monday and the Thanksgiving Holiday falls at the end of the prior week, eliminating three critical business days from the last five days of the month.

We have also learned that some lenders are establishing early cut-off dates after which they will not accept loan applications from first time buyers. Some lenders are setting these dates as early as mid-October to avoid any potential liability for not being able to close their loans prior to the tax credit deadline. In some cases this may cause real estate practitioners to seek mortgage loans for first time buyers from sources other than their normal lenders.

It cannot be overemphasized how important it is to counsel buyers seeking to use the First Time Home Buyer Credit to do the following:

• Get pre-approved with your lender and provide all documentation to them in advance. Understand their deadlines for submission of the complete package, including a binding purchase agreement, to their underwriters.
• Identify your target property ASAP.
• Enter into a binding purchase agreement with a traditional seller who has the ability to close by the third week in November.
• Perform all inspections and related repair work as soon as possible to avoid any closing delays.

While November 30 may sound like a long way off, time is truly running out for first time buyers to meet the tax credit deadline.