Home Buyers Win - Home Buyer Tax Credits and National Flood Insurance Program Extended

Last Updated Jul 1, 2010 2:17 PM EDT

Home buyers with contracts in hand dated April 30 must be celebrating - we know the Realtors are.

Home Buyer Tax Credit Extension

Late last night, the Senate finally approved the extension of the home buyer tax credit closing date. To qualify for the home buyer tax credit, you must now close your deal by September 30. Here's a bit from the Realtors press release this morning:
"What a great way to begin celebrating our nation's most patriotic holiday by opening the door to the American dream of homeownership to thousands of home buyers who would have been shut out of the homes of their dreams through no fault of their own," said NAR President Vicki Cox Golder, owner of Vicki L. Cox Real Estate in Tucson, Ariz.

"We know that up to 180,000 home buyers eligible for the tax credit are rejoicing this morning. And we all thank both houses of Congress for their work to ensure passage of both bills," Golder said.

One of the sticking points? Some Senators were concerned that home buyers would back-date their contracts so that it looked like papers were signed by April 30 in order to collect the tax credit.

According to the IRS, roughly 10 percent of the 2.5 million returns that have been filed to collect the tax credit appear to be fraudulent. I'm sure a handful of home buyers will try to back-date contracts, but most of the 180,000 home buyers who would have otherwise lost the tax credit will be relieved.

National Flood Insurance Program Reauthorized

Meanwhile, the Senate passed the National Flood Insurance Program (NFIP) Extension Act of 2010 (H.R. 5569), which reauthorizes extension the NFIP until September 30, allowing currently stalled transactions to move forward. The bill is retroactive and covers the lapsed period from June 1, 2010, to the date of enactment of the extension. Any new policy applications or renewals that were signed and submitted during the lapsed period will be effective from the date of application. In the case of waiting periods, the waiting period will start from the date of application.

The only question here is "What the heck is Congress doing reauthorizing the program for just three months?" This is the third or maybe fourth short-term reauthorization of this program. It would make so much more sense to reauthorize the program for 3 or 4 years, and be done with it.

A three month extension of the NFIP is useless. Still, pop the bubbly.

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Ilyce R. Glink is the bestselling author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!.
She blogs about money and real estate at ThinkGlink.com.
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    Ilyce R. Glink is an award-winning, nationally-syndicated columnist, best-selling book author and founder of Best Money Moves, an employee benefit program that helps reduce financial stress. She also owns ThinkGlink.com, where readers can find real estate and personal finance resources.