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Congress Extends the Deadline to CLOSE

Last year, Congress passed a tax credit for first time homebuyers and many “long-time” homebuyers. This credit provided for two deadlines:

  • Receive a binding offer to purchase on or before April 30, 2010
  • Close the sale on or before June 30, 2010.

Lenders, title companies, and real estate professionals worked feverishly to close transactions before that June 30th deadline. All the while congress was working (less feverishly, we are sure) to pass an extension of the bill.

Hours before it was set to expire, the Senate finally approved an extension to the June 30 closing deadline for the homebuyer tax credit, The move will give buyers who signed a purchase agreement by April 30 more time to close and still receive the tax credit of up to $8,000. Once signed by the President, the new deadline will be Sept. 30, 2010.

This extension will benefit those home-buyers who’s deals stalled or financing ran into trouble.  Many homebuyers could not close on short-sales or other distressed properties because of delays in lender approval.  The extension will be a welcome relief to those buyers.


Buyers, Realtors, and other professionals should be aware that this extension only affects home buyers who are in a binding contract that was signed before May 2010. It will not benefit those potential homebuyers who are still shopping for a home.
Interest Rates at Historic Lows

Nevertheless, today’s unprecedented interest rates may amount to a savings almost equal to the tax credit. Indeed, in January, a home-buyer might have locked in on a 30 Year Mortgage at 5.4%, a wonderfully low rate by historical standards. Today, that same 30 Year Mortgage might be at 4.6%. On a $200,000 mortgage, this amounts to a monthly savings of about $97.75 or $4,600 in just four years. While the tax credit might not be available for those still shopping for a home, the savings are still there.

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