The Deadline for the First Time Homebuyer Tax Credit is Looming…

We are fast approaching the deadline for the First Time Homebuyer Tax Credit – per previous emails do not depend on this tax credit being extended.  Move now to get your buyers under contract by no later than the middle of October – ladies and gentlemen that is NEXT MONTH.  Now is the time for urgency; create this with your buyers and within yourself this tax credit is not guaranteed to be extended.  Your transaction needs to be closed by November 30, 2009.  Not in escrow CLOSED by November 30th.

Ratios to be cognizant of…

55% is the maximum allowable Backend Debt To Income Ratio.  Your backend debt to income ratio (DTI) is determined by your monthly debt (debt that appears on a credit report; credit card minimum payments, car payments, student loan payments etc.) and your proposed new home mortgage payment divided by your gross (pre-tax) monthly income.  If your backend DTI exceeds 55% your buyer is not approved to purchase…period.  It is imperative that if your buyer is using any lender that is either an out of state lender or worse an internet lender THEY ARE NOT AWARE OF OUR REAL ESTATE TAX ANNOMALLY!  By that I mean recently an agent was driving around a potential buyer who was pre-qualified through an out of state lender the lender had this buyer pre-qualified up to $150,000 purchase price.  The fatal flaw was that the lender had them qualified on a tax rate of just $1,312 per year.  We all know that the tax rates in Las Vegas have a way to go before coming back in line with the old .875% tax rate estimates of the past (.875% was an industry standard estimate prior to the boom and ensuing bust of home values).  Be sure to give PHH a second look to make sure even your “qualified buyers” the once over to save you time and gas or just to point you in a more accurate price range.

Funds to Close…

The recently passed Nevada Funds to Close bill requires that ALL funds be cleared through the title company’s bank account PRIOR to recordation.  Cashier’s checks, while typically considered guaranteed funds still take roughly 48 hours or longer to actually deposit into an account.  Title companies typically only send bank deposits once a day (for obvious reasons) and this will cause your buyers to not be able to take possession of their homes as fast as they should.  Urge your buyers to wire the funds as this process is as close to instantaneous as possible. 

Attention to these details and dates will assist all involved with a smoother transaction and a faster close of escrow.

Dave Reichert and Ray Melton

PHH Mortgage