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A proposal to extend the home buyer tax credit has been introduced to congress by Nevada senator Harry Reid. The home buyer tax credit which stimulated home sales this past spring required that homes be under contract by the end of April and close before June 30th. Reid's proposed extension would give buyers who met the first deadline more time to secure a mortgage loan or shop around for the best mortgage rates.
The home buyer tax credit gave buyers strong incentives to take the plunge and purchase a new home this spring. Buyers purchasing their first home could qualify for a credit of 8,000 dollars while qualifying individuals purchasing a new home could receive up to 6,000 dollar in tax credits.
The National Association of Realtors® has been lobbying for a similar extension to the one Reid has proposed to congress. With the deadline quickly approaching many lenders are overwhelmed with the number of buyers scrambling to finalize mortgage loans and lock in their mortgage rates.
The buyers who were able to get a home under contract by the first deadline in April did what was required of them to qualify for the tax credit. In most situations the backlog that has slowed the closing process is out of their control and as the National Association of Realtors Â® has pointed out it is unfair to penalize them. Reid has attached the proposal to a bill extending job loss benefits and it will be interesting to see how congress reacts to it.
Deadline Extensions Won't Help New Home Sales
The proposed deadline extension is aimed at helping those already under contract and does not re-open the tax credit for new purchases. As a result the extension will not help stimulate new home sales, but will help prevent homes from failing to close and returning to the market by giving buyers and sellers more time to finalize the deal. Currently congress has not talked about another home buyer tax credit and it is unlikely that we will see one. For now home sales must stabilize themselves without government incentives, but those already under contract may get more time to finalize their mortgage loan and close on their new homes.