A plan to give homebuyers an extra three months to finish qualifying for federal tax incentives that boosted home sales this spring was sent by Congress to President Obama to sign. The House of Representatives approved the measure this past Tuesday and the Senate approved it Wednesday night by unanimous consent.
The legislation would give buyers until the end of September to finish their purchases to qualify for tax credits of up to $8,000. Under the current legislation buyers had until April 30th to sign a sales contract and then they had to close escrow by June 30th.
This new bill is only for those buyers who have already signed a contract to purchase a home.
According to the Internal Revenue Service this popular homebuyer's tax credit has helped to stabilize the nation's ailing housing market. More than 2.6 million taxpayers have already claimed the tax credit through April totaling $18.7 billion in tax breaks and generating over 1 million new home sales that most likely would not have happened without it.
Mortgage lenders have been inundated by borrowers trying to get approved before the end of June. Delays with mortgage lending and appraisal companies have forced the closing time for home sales to take far longer to complete this year than normal.
Lucien Salvant, a spokesman for the National Association of Realtors said, "A lot of lenders weren't able to handle the influx of loans that came with the tax credit."
Short sales have been taking much longer to close for buyers and on average short sales made up close to one third of all sales last month.
Extending the tax credit deadline will be a welcomed relief to borrowers who are still waiting to close escrow so they can be eligible to claim the tax credit.