Time is running out for your buyers to benefit from the 1st Time Home Buyer Tax credit – they need to be in escrow by April 30 and closed by June 30. According to NAR about 2 million people qualified in 2009 and another 900,00 to 1 million will benefit this year. Don’t look for this credit to be extended again. There is no political will in DC to fight for another extension and if another extension is granted the cost would be very high – things like putting the mortgage interest deduction in play and that sort of unpleasantness.
Besides, it appears that most of the ‘low hanging fruit’ has been picked. According to many lenders, the quality of applicant has deteriorated markedly from the first 6 months to the most recent period. Those who were in a prime position to benefit from the credit jumped on board early and what they’re seeing now are folks who are just taking a run at the program before it expires. The success ratio of loans to applicants has fallen way off.
There is one group that will continue to benefit from the extension for another year – active duty military serving between Jan 1 2010 and April 30 will have their opportunity extended for one full year. If you live near a military base you might want to make sure those prospective buyers returning from overseas postings are aware of this. This benefit is expected to provide assistance for as many as 10,000 additional first time home buyers, mostly clustered around military bases.
Also this year I understand you can no longer file for the credit electronically. Last year you just filled out IRS Form 5405, attach a signed HUD-1 and filed. However, the lag between e-filing and the ability of the IRS to manually verify your claim before the refund went out resulted in many false or fraudulent claims being processed – so this year you get to send everything in the old fashioned way and wait along with the rest of us.
Still – not a bad deal overall.