The springtime increase in home buying is expected to hit earlier than usual in 2010. This is said to be attributed to buyers trying to take advantage of federal tax credit for first time homebuyers and existing homeowners looking for a new home before the credit expires.
The springtime buying season usually kicks off sometime in March and continues through May. However, this year is different. Buyers who want to be able to take advantage of the up to $8000 tax credit for first time home buyers and up to $6,500 tax credit for existing homeowners shopping for a new home must have a signed purchase contract for the home by April 30, 2010. The closing on the home must also be completed by June 30, 2010.
The tax credit will most likely fuel the demand for homes earlier in the year. The sales of homes will probably take off in February and March and in all probability, increase dramatically in April in order to meet the purchase contract deadline.
To take advantage of this credit potential, buyers should act quickly. According to the National Association of Realtors or NAR, it takes an average of 8 full weeks to get a home loan processed now. That is 2 weeks longer than it used to take in the past. The reason is because of changes made inside the mortgage industry.
The overall impact of the tax credit on home sales is not yet certain. Many economists expect the tax credit to pull home sales that would have occurred sometime later in the year into the first two quarters of 2010. The tax credit is expected to shift a great deal of the demand for homes to the early part of 2010. February, March and April will most likely show an increase in demand.