I received an email the other day from Tricia Fredinburg – a loan officer with Arvest in Little Rock – stating the lender will guarantee the first time home buyer tax credit to qualified buyers for all closings scheduled to take place on or before Nov. 20.

That initially struck me as odd because the tax credit doesn’t expire until midnight on Nov. 30. However, Fredinburg said there are all kinds of issues that could delay a closing so Arvest is trying to get people to recognize a deadline so they’ll have some time to take care of any issues that might arise.

She’s got a good point. A great one, in fact.

Fredinburg said the folks at Arvest will be working overtime to make sure they can get every qualified loan closed so that buyers can take advantage of the tax credit. In other words, Arvest – and probably every mortgage lender in this state – will do what they can to make sure everyone who is qualified for the tax credit gets it. Some issues that delay closings are out of the control of lender.

In other words, the bank is simply advising people that cutting things too close could result in a postponed closing and no tax credit. In addition to the normal issues that cause delays, Fredinburg pointed out the Nov. 30 deadline falls right after the Thanksgiving holiday and the long weekend that follows – that’s time lost to people scrambling to resolve problems and get to the closing table.

The closing date is critical because IRS deadlines state that people eligible for the tax credit must close on a home before Dec. 1. The tax credit, of course, is for buyers who haven’t owned a home in the past three years and follow certain income guidelines – individuals making $95,000 a year or more and couples making $190,000 or more are ineligible. The full tax credit is only available to individuals making $75,000 a year or less and couples making $150,000 a year or less.

The full tax credit totals an amount equal to 10 percent of the purchase price of the home or $8,000, whichever is less. The tax credit does not have to be paid back if the buyer stays in the home for at least three years.

Another issue that Arvest has raised – and we at the Arkansas Realtors® Association (ARA) have been talking about for a couple of months – is that people who wait until October to start looking for a home may be out of luck if they want to meet that Nov. 30 deadline.

Why? A lot of homes that are priced at around $150,000 or less have been selling quickly, so it might take about a month for shoppers to find the proverbial perfect house. It also takes around a month to close on a purchase.

This month, then, is the time for people wanting to get that tax credit to start shopping. Waiting around too long could result in a closing date past Nov. 30 and a missed opportunity.

Of course there have been rumblings coming out of Washington, D.C. this year about an extension of the tax credit. Waiting for that might be a mistake because, frankly, no one is sure if we’ll see another tax credit for home buyers next year.

There are no guarantees beyond the tax credit that is in place now, so we at the ARA have been advising people to take advantage of it before it’s gone.

House to House is distributed weekly to publications in the Natural State by the Arkansas Realtors® Association.

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