Do You Really Have Til November 30, 2009 To Benefit From The Tax Credit?

As I've reminded you of many times, the $8,000 First-Time Homebuyer Tax Credit is set to expire on November 30, 2009. I am not trying to beat a dead horse but in order to claim the tax credit, the IRS requires you to close on or before that date. December 1, 2009 is too late. But should that be the date a first-time homebuyer sets his/her/their calendar by?

I would suggest not targeting November 30, 2009. The biggest reason is that there are no do-overs. If you do not close by November 30 , 2009, you lose. If anything goes wrong, as is usually the case in a real estate transaction, you just missed out on $8,000. That's a pretty expensive oops! Making a problem more likely to happen is the fact that recently the County Recorder of San Diego County modified its recording guidelines to eliminate funding a loan and recording the Deed on the same day, except on the last day of a given month. Since every other first-time homebuyer is targeting that date there is a strong chance that many first-time homebuyers will be very dissappointed and wish they had the advance notice you are getting.

The optimal time for closing your home purchase just might be the week of November 16th to build in the proper cushion for potential delays. And the earlier in the week, the better. To further understand why, let's start with the fact that home sales volume is through the roof. New home sales data and existing home sales data have been very strong and first-time homebuyers account for nearly 1/3 of all transactions.

It is reasonable to conclude, threrefore, that with the combination of low homes prices, record low interest rates, and the $8,000 tax credit, buyer interest will remain strong all the way through the November 30, 2009 deadline. You should plan now to avoid the panic of missing out on the tax credit.

Now let's consider 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. No closings.
• November 25, 2009 is the day before Thanksgiving; typically a "half-day."

So, that backs the November 30, 2009 first-time homebuyer tax credit deadline up by 6 days to Tuesday, November 24, 2009. That would mean that your loan has to fund on Monday, November 23 in order to record on Tuesday. That may workout okay for you depending on whether or not something goes wrong and how long it will take to fix the problem. With your closing date set for the week of the 16th you'll meet your tax credit deadline with plenty of time to spare.

This commentary may prove to be completely unnecessary if Congress extends the First-Time Homebuyer Tax Credit, but if Congress elects not to extend the tax credit it may save you $8,000. Good luck and happy house hunting.