Why smart buyers buy before the end of the year

Now that Congress has passed the tax credit extension, many buyers are kicking back for the holidays and waiting for early spring to pick up where they left off. But did you know there are distinct advantages to buying before the end of the year?


LOW INTEREST RATES: Typically, interest rates dip when the market slumps. And in a normal market, that time is usually around the end of the year.

In fact, in December of last year, mortgage applications were at an all-time high. Why? Because interest rates dipped to an insanely low level.

Currently, rates are still at record lows. And as we slide into December, based on the latest news from Bernanke and the Fed, they certainly aren't going up anytime soon.


TAX SAVINGS. Closing on your new home by Dec. 31, 2009, means you can deduct mortgage interest, property taxes and points on your loan on your 2009 income tax return. You can also deduct the interest costs associated with a home equity loan. These deductions are significant, especially in the early years of your loan when you are paying off so much interest.


HOMESTEAD EXEMPTION QUALIFICATION. In Georgia, there's a property tax exemption called "Homestead Exemption." It's pretty simple: if you claim a home as your primary residence, you get to file for an exemption.

Having a Homestead Exemption in place can mean taking a pretty good chunk out of your yearly property taxes, sometimes up to 35%. But, you must be living in the home on January 1 for the year that you file the exemption in order to receive it.

Let's say you're looking to spend about $175,000 on a home here in Atlanta. If you found a home where the seller does not live there - perhaps they either moved away months ago, have tenants in the house, or the property is bank-owned - there's probably no existing Homestead Exemption in place. If you closed on this home by December 31, 2009, your lender will still have to estimate your portion of your monthly property tax escrows at the full taxable rate. But because you will be living in your home on January 1 of 2010, you'll file your Homestead Exemption for 2010, and you'll get a nice surprise when your tax bill comes later in the year: not only will your property tax be greatly reduced, but you'll probably receive a notice from your mortgage company letting you know that your mortgage payments are now going to be lower due to the the lower property tax. You may even get a refund from your escrow account!


SELLERS ARE MORE MOTIVATED. Many sellers are anxious to sell by the end of the year so that they, too, can enjoy tax savings on the next home they purchase. That means you have more leverage during negotiations and they may be willing to accept lower than their listing price.

Generally speaking, your housing choices during the fall are still healthy. By December there are traditionally fewer houses on the market. October and November are great months to go house hunting.

This year, due to the first-time buyer tax credit, many sellers were putting their homes on the market in early Fall in anticipation of the tax credit expiring December 1. But now that it's been extended, these same sellers are willing to do whatever it takes to get their house sold sooner than later. So watch for dropping prices on these homes as we approach the holidays.


IT'S EASIER TO MOVE. Many moving companies are booked many weeks in advance during the rest of the year. But around the holidays, it's just so much easier to secure the services of a moving company or a rental truck on shorter notice.


A NEW HOME FOR THE HOLIDAYS. Get in, get closed and get on with your life -- plus, the holiday season is a great time to celebrate your new home with family and friends!