Four Things to Know About Real Estate Contracts Now

(MoneyWatch) 

1. Volume's Up.The number of contracts signed (not closings) was up 6.1 percent in September, marking the eight month in a row that the index has risen, according to pending sales data from the National Association of Realtors. The rise wasn't unexpected -- we are bumping against the planned expiration of the first-time homebuyer tax credit -- but reporter Alan Zibel of the Associated Press notes that it was above consensus Thomson Reuters expectations.
2. Banks Are Running Late. I just deposited a check for an October closing ... from a June contract. That was six weeks later than all parties expected the closing to be, and a lot of it is that the mortgage lenders are taking their time to dot their "i"s and cross their "t"s. One example: in apartment buildings, lots of lenders are requiring that the board of managers purchase fidelity bonds, which are a sort of anti-embezzlement insurance that lenders didn't really demand two years ago. But the banks are being picky now. Make sure when you review your contract, you understand what happens if the buyer doesn't make the closing date.
3. Banks Will Probably Be Running Later. Currently, the first-time homebuyer tax credit is available to purchasers who close by November 30th. This bascially means your poor mortgage provider is going to be in his/her office round-the-clock for most of November, trying to help people make deadline. If you're not a first-time buyer -- or are selling to someone who isn't -- remember to reserve extra time for communications with the mortgage bank, because that lender's phone will be ringing with people screaming, "I have to get this loan through now, or it will cost me eight thousand dollars!" Oh, and don't forget Thanksgiving. November is going to be a mess.
4. December May Be a Reasonable Time to Buy.
   Jumbo lending is still pretty problematic in many parts of the country -- but at least last week the government took steps to keep the caps on "conforming," or non-jumbo, loans, high. On Thursday, the House and Senate both approved a measure to keep the conforming loan limit caps at their temporary high of $729,750 for single-family homes in high-cost states -- that's a cap that, without the prop, was expected to shrink back to $625,500 at the start of the next calendar year. President Obama has voiced support for the higher caps, notes Reuters, and is expected to back them. What does this mean to you? It removes the probability of a rush on lenders in December ... which tends to be a month that already favors homebuyers, as worsening weather thins out the competition. If you see something you like, not a bad time to go to contract.