First-Time Homebuyer Tax Credit Extension

Congress appears poised to extend the $8,000 first-time homebuyer tax credit as early as tomorrow. The Obama administration has urged Congress to extend the popular tax credit in order to allow first-time homebuyers more time to purchase a home and benefit from the $8,000 perk. In a joint statement, HUD Secretary Shaun Donovan and Treasury Secretary Tim Geithner said, "We welcome efforts taken by Congress to extend the first-time homebuyers tax credit for a limited period ... This credit has brought new families into the housing market and contributed to three consecutive months of rising home prices nationwide."

Senate Majority Leader Harry Reid (D-NV) indicated a debate on the floor of the Senate, followed by a vote later today, should clear the way for Senate approval, followed by House approval by tomorrow. Scheduled to expire at the end of the month, the new expiration is expected to be June 30, 2010, with a signed purchase contract dated no later than April 30, 2010. In addition to the extension, the new broadened plan would allow more people to benefit for the tax credit, including existing homeowners and higher-income borrowers.

The expanded plan is expected to include a $6,500 tax credit for homebuyers who have lived in their previous residence for at least five years. Furthermore, the previous maximum incomes of $75,000 (single borrowers) or $150,000 (couples filing jointly) to qualify for the full $8,000 tax credit will increase to $125,000 and $225,000, respectively.

The new plan is expected to become effective on December 1, 2009. With current mortgage rates still extremely low, this is fantastic news for those first-time homebuyers still hoping to find their first home and still get a low mortgage rate.

-Robert Hyder