The Senate on Wednesday approved a plan to give home buyers an extra three months to finish qualifying for federal tax incentives that boosted home sales this spring.
The move would give buyers until Sept. 30 to complete their purchases and qualify for tax credits of up to $8,000. Under the current terms, buyers had until April 30 to get a signed sales contract and until June 30 to complete the sale.
The proposal, approved by a 60-37 vote, would only allow people who already have signed contracts to finish at the later date. About 180,000 home buyers who already signed purchase agreements would otherwise miss the deadline.
The National Association of Realtors has been pushing hard in Congress for the extension. Mortgage lenders, the trade group says, have been swamped with borrowers trying to get approved by the end of the month. Many potential borrowers are unlikely to make the deadline.
"If Congress fails to act promptly, then prospective home buyers might not get the benefit of the home buyer tax credit, even though they have completed contracts," the Realtors said in a letter to lawmakers.
First-time buyers were eligible for a tax credit of up to $8,000. Current owners who bought and moved into another home could qualify for a credit of up to $6,500.
The House is expected to easily approve the measure next.
I am just wondering why this took SO LONG? The banks and attorneys have been under siege to make all these deals close by June 30. This has been difficult to near impossible based on the sheer volume of contracts that made the April 30 deadline. Here in New York, it usually takes more than 60 days to close a deal under normal circumstances. These are NOT normal circumstances. The tax credit pushed many people to buy sooner than they normally would have, so the mortgage companies and attorneys have been overwhelmed.
The large number of short sales will definately benefit because it takes much longer than 60 days from contract to close these. It will still be tough to close some these by the (hopefully) new September 30 deadline. Typical short sales take 3-6 months to get approved. This extension will allow the buyers who took the risk of purchasing a short sale not to lose the tax credit.
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