Could new rules make tax-credit closing deadlines tough to meet?
An article in this weekend's Washington Post discusses how new regulations could make it tougher for homebuyers to meet the June 30 closing deadline in order to cash in on the federal governments $8,000 tax incentive.
From the Post:
"As a result of toughened underwriting standards, confusing new federal disclosure rules, appraisal regulations and a long list of other potential obstacles, meeting that deadline could be harder than expected. In fact, mortgage industry leaders say some buyers who are seeking the tax credits won't get a cent because the clock will run out on them."
The same article also advises:
"Anticipate massive traffic jams and regulation-driven snares at title, escrow and settlement firms in the weeks and days preceding the deadline."
Changes to Truth in Lending Act that took effect August 1 of last year require a minimum seven-day waiting period between issuing a disclosure of mortgage loan costs on a Good Faith Estimate and the settlement or closing date.
Tack on an additional three business days of wait-time before consummating a loan transaction should the APR reflected in the initial disclosure vary by more than an eighth of one percent (.125%).
Homebuyers to ensure they receive the federal tax credit, not only should they be planning ahead as the Post recommends, they should make sure to receive a guaranteed quote for title services and avoid any last-minute surprises that could push them beyond the deadline.
And speaking of last-minute: Don't wait until the last minute to schedule closing. Even the most diligent of title searches can overlook something. Read this story from the trenches about a $6,000 lien on a $1,200 property. In short, the seller's attorney and real estate agent swore there were no issues with the property's title, and guess what - they were wrong!
To cash in on the federal credit, a little pre-planning and a lot of CYA is in order.