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Interest rates are at historic lows, making it possible for many homeowners to refinance and improve their financial position – and combined with homes listed currently at bargain prices, those who are in the market to buy are able to purchase the home of their dreams and get a great deal.

Here’s the bad news. All lenders and investors in the US have been completely slammed with the recent increase in loan applications – right at the time that many have laid off staff to save money in a challenging economy. This means that time frames needed for underwriting, approvals and closing have become longer than normal. It also means that some companies have chosen to actually raise rates, just to slow down the volume to a manageable level.

But wait – there’s an answer. I know how to plan ahead and be smart, so that we can keep your rate protected. We may want to consider a longer lock period than we might normally utilize, just to ensure that your loan will be processed, underwritten, approved and closed in time to protect your rate in this extremely volatile climate. Normally we lock rates on 30 days and in these times we are locking refinances on 60 days.

According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.

While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.

The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.

As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.

Tax Credit for Home buyers

First-time home buyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.