If you’re considering buying a home in 2009, you’re probably hearing various news reports tell you that your time might be running out. That’s true for First-Time Home Buyers. However, the timing rules are changing for ALL buyers due to recent government-enacted lending rules. You can click on the headings below to read more about the program.
First-Time Home Buyer $8000 Tax Credit
This government stimulus program applies to homes CLOSED PRIOR TO December 1, 2009. That means a closing date no later than Nov 30, but to be safe Nov 27 should be considered the “no later than” closing date. Due to the following two new lending rules, to be assured of closing by the end of November, a buyer really needs to be in-contract on a home no later than the end of September. To meet that date, you should be talking to lenders in early August to provide your paperwork to them to get pre-approved so you can begin actually looking at homes with a Realtor®.
HVCC: Home Valuation Code of Conduct
This government ruling went into effect May 1, 2009 and has caused considerable problems and complaints with the appraisal process. This government change impacts ALL buyers, not just first-time buyers. The appraisal process is or can take longer than it used to especially if there are issues with an appraisal coming in too low. Buyers need to allow for extra time if negotiation is required after the appraisal is received, or in the event the Purchase Contract is canceled, they’ll need the time to start searching for another home to purchase to start the process all over again.
MDIA: Mortgage Disclosure Improvement Act
I’ve not written any previous articles on this Act because it’s so new. It goes into effect July 30, 2009. The details of this Act are still being digested by lenders to determine what steps/actions they need to take in order to comply. The gist of the Act is that lenders will need to revise how they disclose the APR to the buyer prior to making an application, the timing the buyer has to review the disclosure information, and required follow-up disclosures/timing when any of the financial information changes throughout the buying process.
Suffice it to say that this Act can/will add significant time to the home-buying process. Lenders have informed us that we should no longer write Purchase Offers with 30-day closings. We should write them such that we allow at minimum for 45-day closings, and it is preferred if we allow for 60-days from going into contract until the property closes.
If you are a buyer and need to be out of your current home or out of a rental lease, you need to allow the extra timing that this Act will require. Talk to your lender NOW to have the Act explained to you and how the lender’s interpretation of it will impact you.
What these new rules mean for buyers
Agents used to tell buyers to become pre-qualified prior to shopping for homes. That’s no longer acceptable. Now buyers need to be PRE-APPROVED. Lenders have tightened their lending rules so much that even though a buyer may think they’ll qualify to buy a certain priced home, the lender may not agree.
Smart, experienced agents know that it is foolish to show homes to buyers until the Pre-Approval process is complete. There’s nothing worse than showing homes to excited buyers based on the price the buyer thinks they can afford, only to learn later that they have to move down in price. The look of disappointment on the buyers’ face is so sad, and of course, the lower priced homes are never as nice. So, experienced agents are unlikely to set up showings for buyers until a lender has given their blessing on the price a buyer can be approved to purchase.
Need a Lender? I recommend calling either one of these two people. They both are knowledgeable and reputable.
- June Zepp, Real Living Mortgage, 614-825-8806
- Tony Butler, Equitable Mortgage, 614-764-5071
Copyright © 2009. Elaine Reese, Real Living HER. Reproduction of any portion of this blog post or the images is prohibited by the Digital Millennium Copyright Act. If this post is being viewed on any site other than www.ReesesPiecesOfRealEstate.com then the material has been stolen without permission. Violators will be reported.
