Homebuyers have a week to get tax credit

Josie Anderson is standing in another front yard of another home that she is thinking about buying.

“I have to go look at five houses after this,” Anderson, 20, of Cedar Rapids said on Wednesday afternoon. “It's a rush”.

The First-Time Homebuyer Credit requires homebuyers to have a signed agreement by April 30th. Anderson said she wouldn't even be in the market for a home without being able to get an $8,000 federal tax credit.

The expiration of the tax credit also comes at a time when mortgage rates are still at historic low points.

“There have been times where interest rates are high and home values are low,” said Kevin King of Wells Fargo Home Mortgage in Cedar Rapids. “Rarely do we have low interest rates and lower prices. We think it has been a huge opportunity for most homebuyers.”

On Wednesday morning, the rate for a traditional, 30-year fixed mortgage dropped to 4.875%.

“That's better than it was in the 1950s,” said Larry Potter, Director of Mortgage Lending at Linn Area Credit Union.

But how long should buyers plan to see the rates at this low level?

“We expect rates to increase gradually, possibly a half-percent,” said Potter. “It will be a slow rise.”

Local real estate agents say the effect of the tax credit over the past year has been steep.

“We're up 39% on ‘sale pendings' from last year at this time,” said Gary Doerrfeld of Coldwell Banker Hedges. “The urgency as it gets closer, we're seeing more open houses and double the people what they usually are.”

Some markets, nationwide, may favor buyers but Doerrfeld said Wednesday that homes “under $150,000” are favoring sellers right now, especially with the $8,000 tax credit still in play.

With little more than a week to decide on a house, Anderson knows the time is ticking away. She even said she will probably take herself off the market for buying a home if she doesn't meet the April 30th deadline.

“I still have nine days,” Anderson said. “Plenty of time.”

Both lenders and agents recommend buyers avoid waiting until the last minute to try and get an offer accepted. Real estate purchases often lead to counter offers and contingencies that can delay the process. Even as people meet the April deadline, to finalize getting the tax credit also requires the buyer to close on the purchase by June 30.

By Chris Earl, KCRG-TV