The $8,000 First Time Buyer Tax Credit Expires Soon. Is it Too Late to Start Looking for a Home?
By Gina PogolMortgage Credit Problems Columnist
Ann Asks: Dear Gina, My credit is a little bad but not horrible--a batch of late payments over a year ago when I lost my job. Since then I have paid my bills on time and I want to buy a house and get the first time home buyer's credit of $8,000. Will I be able to get a loan and is it too late to start the process?
Gina Says:
Dear Ann,
Well, it IS the eleventh hour but you might be able to pull it off. With bad-but-not-horrible credit, I'd recommend an FHA loan. If your job is not in a new field for you, one year there is sufficient for loan approval. While FHA doesn't have official credit score requirements, some FHA lenders do impose their own limits. So you should probably pull a credit report at www.annualcreditreport.com and purchase your credit scores if you think you might fall below 620--that way you can ask lenders upfront what their score requirements are and not waste time. If you don't qualify with one lender, another one may want you so keep shopping.
FHA loans and other bad credit mortgages are often underwritten electronically, which allows you to close faster. The key is to start shopping NOW (fill out the form on this site for responses from a variety of lenders) and choose a loan agent who is responsive (returns your calls within an hour). You need someone who will be on top of your loan and get back to you quickly. Ideally, you can get an automated pre-approval right away and just have to provide income and asset documentation for a full approval.
That's not the end of the road, however. When shopping for lenders, ask how long the appraisal process is taking--some have in-house appraisers, and others use appraisal management companies. You want the fastest turnaround you can get--that may be worth slightly higher fees; in this case the lender with the lowest rate may not be your best choice.
When you write an offer, you can have your real estate agent include a clause that gets you out of having to complete the transaction if it doesn't close by the tax credit cut-off. That's one way to motivate everyone involved to complete it on time.
Finally, avoid short sales or homes still under construction. It is unlikely that the purchase would close in time for you to take advantage of the credit. Good luck and thanks very much for writing.
Gina
About the Author
Gina Pogol has over a decade of mortgage lending experience, in addition to practice as a paralegal for a bankruptcy attorney, and as a business credit consultant for Experian. She is also certified to underwrite Fannie Mae loans. She earned her BS in Financial Management from the University of Nevada.
All information provided “as is” for informational purposes only, and is not financial advice. MortgageCreditProblems.com, its affiliates, and any of the independent providers of information on this site shall have no liability for any informational errors or incompleteness, or for any actions taken in reliance on information contained herein.
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