Tax Credit of $8,000 extended?

No one knows what's going to happen with the Tax Credit. Could
continue/extend for 6 months, could increase to $15,000 for all buyers,
could go to zero. If person can close on or before November 30, 2009
they will get a prorate $8,000. If they close after December 1, 2009
may get a shot at $15,000 or - As Clint Eastwood say's "do you feel
lucky?"


Homebuyer Tax Credit Extension Debate Heats Up

The Senate is slated to take up a bill this week that extends
unemployment benefits and it might include an extension of the $8,000
homebuyer tax credit. Proponents of the first-time homebuyer tax credit
that is due to expire Nov. 30 were planning to offer amendments to
unemployment benefits bill that would extend and possibly expand the tax
credit. But now it appears Senate lenders are working on a compromise
that could be tucked into the bill as a manager's amendment. Such an
approach would increase the chances that the first-time homebuyer tax
credit would be extended by at least six months. And depending on the
costs, it might include features of a proposal sponsored by Senators
Christopher Dodd, D-Conn., Johnny Isakson, R-Ga., and Joseph Lieberman,
D-Conn., that extends the tax credit through June 30. The
Dodd-Isakson-Lieberman proposal expands the tax credit to all buyers and
raises the income limits to $150,000 for individuals and $300,000 for
joint returns.

Sooner or Later the First Time Home Buyer Tax Credit Will Die

By Paul Muolo

The two most important "unknowns" facing the mortgage industry are
these: what will happen to interest rates when the Federal Reserve stops
buying GSE MBS and will the expiration of the $8,000 first time home
buyer tax credit hammer the origination business? Currently - as most
mortgage bankers can attest - profit margins are the best they've been
in years and plenty of "newbie" home buyers are dipping their toes in
the water, believing now is the time to pounce because bargains abound
and rates may never be this low again. (I've heard those last two
arguments many a time in my 20-plus years in the business.) It's no
secret that both Realtors and mortgage bankers have been heavily
marketing the FTHB, warning that time is running out on this $8,000
federal giveaway. At press time it was still unclear whether the White
House and Congress would, in fact, extend the credit beyond the November
30 sunset date. Budget hawks and selected fiscal conservatives alike
believe that this "benny" needs to die now before it gets even more
expensive than the $15 billion it has already cost. By now you've heard
the arguments from the various trade groups: thousands of consumers have
used the FTHB and without it they wouldn't have bought. Maybe so. But
eventually this tax give away needs to end. The problem with holding a
"sale" for too long (and let's face it the FTHB is indeed a sale the
only different being that Uncle Sam is paying for it and not Macy's) is
that after a time it becomes "institutional." Consumers expect it. They
consider a birth right. And maybe Uncle Sam should allow the FTHB to
expire as planned at the end of next month. The Mortgage Bankers
Association wants it extended for seven more months. The home builders
want it for another full year. And both think the credit should be made
available to all buyers not just newbies. This is what will happen if
the FTHB dies on schedule: home buyer traffic will decrease,
applications will fall and lenders and Realtors alike will cry foul. But
if the economy is truly improving perhaps the foot traffic will only
slow for a few weeks before reviving. There are two components to home
affordability: rates and home prices. If rates stay low (which they will
through February) then for volumes to keep pace sellers might have to
drop their prices further. The lower the price, the lower the monthly
mortgage payment. Such a scenario speaks to affordability. Sooner or
later, the housing and mortgage industries will have to swim without a
life preserver. Now may be the time, as painful as it may be.