Four Options For Extending The First-Time Home Buyer Tax Credit

As you are probably aware, the first-time home buyer tax credit is scheduled to expire on November 30th, 2009. Rumors were being reported last week that the U.S. Senate was considering a few different proposals for extending the tax credit. It was also reported through various sources that a vote may have been forthcoming last week.

Well, last week has come and gone and there is still no word of any resolution to passing an extension to the popular first-time home buyer tax credit. There was concern an extension to the home buyer tax credit may have been in jeopardy when they released the existing home sales for September 2009.

Existing home sales un expectantly rose to seasonally adjusted annual rate of 5.57 million homes which is greater than 9% higher than last month of August 2009 rate or 5.09 million and also September 2008 rate of 5.10 million homes.

Total housing inventory in September 2009 fell to 3.63 million homes which is 7-8 month supply at the current sales pace which is down from 9.3 month supply in august 2009 and 15% lower than a year ago. The current housing supply is said to be the lowest we have seen in 2 ½ years.

Fortunately, it is believed the first-time home buyers were responsible for up to 45% of the home sales which transpired this year and they were inspired by the tax credit to actively pursue their goal to obtain the American Dream.

Today it was announced that New Home Sales for September 2009 dropped 3.6% to an annually adjusted rate of 402,000 units when it was expected to rise to 440,000. This latest unexpected report should hopefully result as a catalyst to inspire the law makers n Washington to quickly negotiate an extension to the popular home buying credit.

Some of the rumored options for an extension are:

1. Extend the first-time home buyer credit for $8,000 until June 2010
2. Same as above yet do not restrict the program to only 1st time home buyers
3. Either with or without both of the above yet continue it for all of 2010 while gradually reducing the
   amount to in $2,000 increments of $6,000, $4,000 to 2,000
4. The latest to come out of Washington as a possible resolution to keep the existing tax credit for first-time home buyers at $8,000 and introduce the availability for expanding the credit to current home owners if they have lived and owned their current residence for at least 5 years. The income limits would be increased from $75,000/$150,000 to $125,000/250,000 for singles or married couples respectively. This particular, structured compromise between the democrats and republicans would extend the tax credit to home purchases "under contract" until April 30, 2010 with the borrowers then given an additional 60 days to close on their property to be eligible to collect the tax credit.

With current mortgage interest rates for fixed rate mortgages still under 5%, 5/1 arms still in the 3% range, lets hope the rumors that the senate is close to approving the extension of tax credit in one form or another while rates are at these incredibly low levels are accurate.

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