Congress' recent extension and expansion of homebuyer tax credits is already bringing out buyers and may help extend the current modest rally in home sales, according to local real estate agents.

"It has been pretty active out there," said Tim Reed, a Realtor with Century 21 Pace Estates in Valparaiso. "I was hoping and praying they would get the extension through. It has made a lot of difference to a lot of people."

On Nov. 5, Congress voted to extend through the end of April the current $8,000 credit for first-time homebuyers that was slated to expire at the end of this month. And the legislation added a $6,500 homebuyer credit for existing homeowners looking to buy a new home.

Realtors like Jane McMullan, also at Century 21 Pace Estates, said they already are seeing the effect.

This fall, McMullan was helping a young Valparaiso University math professor look for her first home. But the professor just missed being able to cash in on the current first-time homebuyer credit when she found her Victorian dream home because the closing would not take place by the Nov. 30 deadline. Then Congress took action on the extension, and President Obama signed the measure.

"And now she's going to get it," McMullan said.

The tax credits are what is known as "fully refundable," meaning the amount by which the credit exceeds taxes owed will be paid out in cash to the taxpayer, according to the Internal Revenue Service. If the first-time homebuyer elects to amend a 2008 return and already has paid all taxes owed, he or she could get a check for the full $8,000. A current homeowner buying a new home this year could collect the full $6,500.

Buyers say it's not just the tax credit. Historically low interest rates and the abundance of deeply discounted homes on the market also have them out shopping.

"It's a buyer's market," said Tierra Boyd, 23, as she looked through a four-bedroom home in Hammond on Friday, with Realtor Kris Hoge, co-owner of Remax Realty Associates.

The young accountant is working on her master's of business administration degree at Governors State University but still is taking time to look for a deal on a new house. In May, Boyd just missed out on an "unbelievable" deal on a five-bedroom foreclosed home in Chicago when another buyer beat her to it.

Much of the third quarter's jump in home sales was due to the first-time homebuyer credit, according to the National Association of Realtors. Total existing home sales in the July-September period jumped 11.4 percent to a seasonally adjusted rate of 5.3 million -- the highest level in two years.

At Ayers Realtors in Miller Beach, owner/broker Gene Ayers said about half his buyers this year have qualified for the first-time homebuyer credit. They are buying mainly in the $80,000 to $150,000 range.

Real estate agents are brushing off concerns home sales could sag once the credits expire in April. By then, the economic recovery should be well under way, Reed said. And May traditionally kicks off the strongest home sales season of the year.

"I think it was absolutely needed," Reed said of the extension and expansion of the tax credits. "The market would have rebounded anyway, but what we've done is energize it."

How the homebuyer tax credit works:

Tax credit: It's equal to 10 percent of the purchase price of a primary residence, up to a maximum of $8,000 for first-time homebuyers and $6,500 for repeat buyers. First-time buyers are defined as people who have not owned a home in the previous three years. Repeat buyers must have owned their current home at least five years. The credit cannot be used for houses costing more than $800,000.

Deadline for qualifying: Purchase agreements must be signed by April 30, 2010, and closings must be final by June 30.

Military deadline: The deadline is extended by a year for members of the military who have served outside the United States for at least 90 days from Jan. 1, 2009, to May 1, 2010.

Income limits: Individuals with annual incomes up to $125,000 and joint filers with incomes up to $225,000 qualify for the full credit. Individuals with incomes up to $145,000 and joint filers with incomes up to $245,000 qualify for reduced credits.

How to apply: Taxpayers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a payment. Taxpayers who want immediate refunds can amend their tax returns for 2008 to claim the credit.

Cost: $10.8 billion.

Source: Joint Committee on Taxation