Sen. Harry Reid (D-Nev.) is a powerful man who often gets what he wants. And right now he wants a three-month extension on the popular homebuyer tax credit.
It looks like he’s going to get it.
The problem, as Reid and the mortgage industry see it, is that many Americans signed agreements to buy a new home, but won’t be able to make the June 30 home closing deadline. Often, overwhelmed mortgage companies are finding it difficult to get the paperwork done in time to meet the end-of-June deadline.
According to the National Association of Realtors, more than 180,000 American homebuyers would be impacted if the June 30 deadline was left intact — primarily because their mortgage lenders couldn’t process the loan documentation on time.
But on June 17, the Senate voted to pass an amendment to the Jobs and Closing Tax Loopholes Act of 2010 that extends the June 30 deadline by three months to Sept. 30.
The extension was a prized lobbying goal for industry groups like the NAR. “Time is of the essence,” said Lucian Salvant, a spokesman for the NAR. “It’s important for Congress to get this done, because there’s a whole bunch of loans that aren’t going to close on time.”
Thus the Reid legislation should help on the short end, and the 180,000-odd homebuyers will likely be grateful for the extension. But over the long haul, there’s some doubt that the housing market will continue its early 2010 growth. The NAR says that pending U.S. home sales grew by 6% in April; after a 7.1% hike in March. A 33% drop in new-home sales in May also isn't boosting confidence in the housing market.
So, without the $8,000 new homebuyer tax credit, is there enough incentive for Americans to buy a new home? Certainly, rates are low enough — the national average for 30-year fixed rates is at 4.80% this week, according to the BankingMyWay Weekly Mortgage Rate Tracker.
As low as that rate may be, it looks like Congress may have to take another look at actually bringing back the homebuyer tax credit — and for a lot longer than three extra months.
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