First-time homebuyer credit clock ticking

Buying a house is a big deal and it typically takes a while to complete.

So if you're purchasing your first home and plan to take advantage of the new $8,000 federal tax credit, you better make sure things are on track.

This tax credit, which was improved as part of the stimulus bill that became law on Feb. 17, requires that you complete your first-time home purchase by Nov. 30.

NOTE: If you bought your first home earlier this year, don't worry; the tax break applies to
eligible purchasers who signed the mountain of closing paperwork any time between Jan. 1 through the end of November.

And don't be confused by the Dec. 1 date in the law. The key language there is the phrase "before Dec. 1, 2009," which mean the sale must be completed by Nov. 30.

Even in the best of times, it can take weeks to go from finding a home to making an offer to getting an appraisal to finding financing to actually holding the front door key in your hand.

Nowadays, the biggest holdup is the financing. Banks are (or should be) taking a closer look at buyer qualifications. So build time for that into your home purchase time line.

And if the housing market has started to pick up in your area, that
also could slow things down. More people buying and applying for mortgages means they, too, are jockeying for the same attention of appraisers and loan officers as you are.

Arizona Mortgage News also warns that if you're contemplating a foreclosure or short-sale property, that presents another set of potential delays. Realistically, says the newsletter, you should have a purchase offer completed in September
to help ensure you will get your transaction completed in time to make the first-time homebuyer credit deadline.

The bottom line: If you want to buy your first home AND take advantage of the new tax credit, get on the stick!

Don't forget state help: Several states have programs to help first-time home purchasers.

The National Association of Home Builders says 15 state housing finance agencies — in Colorado, Delaware, Idaho, Illinois, Kentucky, Massachusetts, Missouri, Nebraska, New Jersey, New Mexico, Ohio, Pennsylvania, Tennessee, Texas and Virginia — are participating in loan programs to help first-time home buyers in their area.

New York has gone a step further. Its new Mortgage
Credit Certificate (MCC) gives eligible Empire State home buyers a dollar-for-dollar
credit of 20 percent of the mortgage interest they pay. The remaining 80 percent
of the home loan interest remains as an itemized tax deduction.

Even better, the New York tax break lasts for a decade. The average homeowner can save about
$1,520 per year for the first 10 years, according to state officials, and as many as
700 borrowers might be able to take the tax break this year.

New York residential buyers who combine the state's tax break with the federal credit can enjoy a nice bit of overall tax savings in the initial tax year of their property purchase. The state's mortgage agency, which
will administer the new credit, has online calculator that can
help buyers find out how much the MCC will save them on their 2009 taxes.

Just like the federal program, the New York tax break defines a first-time homebuyer as someone who has not owned a home for at least three years. 

There are, naturally, some restrictions. New Yorkers must get a fixed-rate mortgage to qualify for the MCC. They also must apply for the loan at participating lenders, which so far include Wells Fargo,
Bank of America, M&T Bank and Continental Home Loans in Melville. State officials say they expect more lenders to join the program.

And there are income and
purchase price requirements. The amounts vary, depending on the county in which the home is located. Check with the State of New York Mortgage Agency for details.