Last week, the US senate, by a vote of 60-37 approved a plan giving home buyers an additional three months to make use of federal tax incentives intended to help increase sale of homes in this spring season. Proposed by Senate majority leader Harry Reid, the plan seeks to extend the deadline up to September 30 to enable buyers to finish their purchases while qualifying for tax credits up to $8000 while purchasing foreclosures.
Before this plan was passed, buyers had to finish purchases by April 30 and close deal by June 30. Now, there will be a vote in the house on this subject before June 30 before it becomes a law. This plan will be included in an emergency spending bill that has other clauses like unemployment benefits, more Medicare payments to doctors etc.
The extra time could benefit home buyers like Craig Hudson. Recently married he was motivated to look for a new house under the initial tax credit program of the government. In late winter, he found a home which he could finance with the help of the $8000 tax credit of the government. But paper work and other delays saw the extension of closing date as July 12, 2010- too late under the original government plan. But the New plan is god sent and he can now afford to buy that home, after all.
According to officials of the National Association of Realtors, as many as 75,000 prospective buyers of foreclosure properties met the original deadline for contract but could not close by June 30. At stake were the $8000 tax credits for first time home buyers and up to $6500 for second time buyers.
Most housing deals take 30 to 60 days to close and most deals signed by April have been finalized. Though realtors say that paperwork can be delayed by disagreements and haggling over closing costs of foreclosures. NAR spokesman Lucio Salvant says that majority of loans that do not meet the 40-60 day closing period are involved in short sales. Short sales occur when banks agree to a price that is lower than the mortgage owed on the property. There are other causes of delays as well. Lenders are taking more time to scrutinize borrower’s applications which takes time. For example self employed workers must collect together different histories of their part time jobs to establish their credit worthiness.
