According to Freddie Mac (the Federal Home Loan Mortgage Corporation), the Average rates on a 30-year- mortgage average dropped to an historic low this week, to 4.71% from 4.78% a week ago---the lowest since the agency starting compiling its weekly survey in 1971. A year ago, the 30-year fixed-rate was at 5.53%. These under-5% mortgage rates are touching off interest among home buyers across the country. Mortgage loan applications during Thanksgiving week increased 2.1% on a seasonally adjusted basis from one week earlier, according to the Mortgage Bankers Association. In addition to low rates, a federal tax credit of up to $8,000 for first-time—further expanded to some existing homeowners in the form of a $6,500 tax credit---has further helped sustain home sales.

(Washington, December 01, 2009) Pending home sales have risen for nine months in a row, a first for the series of the index since its inception in 2001, according to the National Association of Realtors®’ Pending Home Sales Index, a forward-looking indicator based on contracts signed. The index increased 3.7 percent in October and is 31.8 percent above October 2008. The rise from a year ago is the biggest annual increase ever recorded for the index, which is at the highest level since March 2006. See full details on Realtor.org (http://www.realtor.org/press_room/news_releases/2009/12/nine_sales) Lawrence Yun, NAR chief economist, said home sales are experiencing a pendulum swing and cautioned that home sales could dip in the months ahead. "The expanded tax credit has only been available for the past three weeks, but the time between when buyers start looking at homes until they close on a sale can take anywhere from three to five months. Given the lag time, we could see a temporary decline in closed existing-home sales from December until early spring when we get another surge, but the weak job market remains a major concern and could slow the recovery process. "Still, as inventories continue to decline and balance is gradually restored between buyers and sellers, we should reach self-sustaining housing conditions and firming home prices in most areas around the middle of 2010. That would mean broad wealth stabilization for the vast number of middle-class families," Yun said.

Did you know that the recent extension of the Federal Tax Credit for First Time Home Buyers added a new tax credit for longtime homeowner? If you’ve lived in your principal residence for five consecutive years out of the last eight years you may qualify for a homebuyer tax credit worth up to $6,500. You must purchase a new principal residence between Nov. 7, 2009, and April 30, 2010. Like the first-time homebuyer tax credit that applies to these dates, you can settle as late as June 30, 2010, as long as you have a binding contract by April 30. An $800,000 cap on the purchase price applies to longtime homeowners, and income restrictions apply: the credit begins to phase out for joint filers at modified adjusted gross income of $225,000 ($125,000 for individuals), and disappears at $245,000 ($145,000 for individuals). Married couples filing separately are eligible for up to half of the $6,500 credit. Don’t forget that for both first-time and longtime buyers who want to claim the tax credit for a purchase made after Nov. 6, 2009, the IRS will require proof. You’ll want to attach to your tax return a copy of the settlement statement you received at your closing.