Another tax credit extension to keep the moribund U.S. housing market from getting even worse was being considered by Congress. The deadline for real estate closings to qualify for a federal home buyer tax credit worth up to $ 8,000 Wednesday night. The House voted Tuesday to extend the tax credit closing deadline to Sept. 30 for buyers who really did meet the April 30 deadline to have a signed contract. But within the Senate the measure is part of a larger bill that also would extend unemployment insurance — a much harder sell. If it doesn't approve, home buyers will be left hanging.
Article source: Tax credit extension depends on fate of unemployment extension by Personal Money Store
Extension of tax credit could affect 180,000 deals
As Congress messes with the tax credit extension, stakes are high for real estate. To be eligible, home buyers needed to have a contract in place by April 30. The tax credit closing deadline was at first June 30. But it was reported by MarketWatch that the National Association of Realtors estimated about 180,000 buyers could kiss $ 8,000 goodbye if the original tax credit closing deadline is upheld. A big problem for buyers has been getting the mortgage approval on time as mortgage lenders work through a pipeline clogged with thousands of applications.
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When the contract signing deadline expired April 30, the last-minute home-buying rush overwhelmed all of the companies that were responsible for handling the sales, including mortgage lenders, appraisers, title insurers and real-estate brokers. It was reported by The Wall Street Journal that the bottleneck has especially affected short sales, where a lender allows a home to sell for less than the amount owed. Unlike normal sales, where only two parties negotiate the price, short sales, resulting from the epidemic of foreclosures, are more time-consuming because they require all note-holders to agree on price. Even normal sales are at risk according to realtors.
Unemployment extension seems critical
Nearly 3 million taxpayers successfully claimed the home buyer tax credit through Might 22 — totaling more than $ 21 billion —the Treasury Department reports. As outlined by the Associated Press, Senate Democrats have combined the tax credit extension with an unemployment extension for laid-off workers whose benefits are being phased out to the tune of more than 200,000 a week. Democrats have been trying for weeks to pass the unemployment extension as part of a spending package, but the bill died within the Senate just last week. Republicans who were opposing the measure want to pay for the unemployment extension with unspent money from last year’s massive economic recovery package.
US housing market won't be helped by extension
The tax credit extension may help homebuyers who are waiting to close some of their deals, but it could have little to no effect on a U.S. housing market that seems to be withering on the vine. The home buyer tax credit was the catalyst that boosted all of the existing home sales in April by 23 percent from a year earlier. There was a 47.8 percent increase in new home sales. But when the homebuyer tax credit expired at the end of April, home sales in May fell to the lowest levels that they have been at since the Commerce Department started tracking home sales statistics in 1963.
Find more information here:
Marketwatch.com
marketwatch.com/story/new-deadline-for-home-buyer-credit-nears-approval-2010-06-30?reflink=MW_news_stmp
Wall Street Journal
online.wsj.com/article/SB10001424052748703627704575298610215024500.html?mod=WSJ_latestheadlines
Associated Press
google.com/hostednews/ap/article/ALeqM5hLKyB9H7lUpiALFVlU7RRJa9-EfwD9GLKOT80
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