The Federal Reserve lowered interest rates this week, which is good news for home buyers and owners. The National Association of Realtors released a statement saying that the lower rates make the dream of homeownership attainable again. “That is the lowest rate in nearly 50 years and will bring buyers back to the market,” NAR President Charles McMillan said. “We are pleased that the government heard our message and responded to our call for action.” Rates had averaged 6.3% in the third quarter, but have now fallen into the 4% range in some parts of the country, making it the lowest rate in nearly 50 years. That has enticed many homeowners to consider refinancing.

According to the Mortgage Bankers Association, mortgage applications rose 2.9% last week. Refinancing made up 76.9% of mortgage activity last week, bringing it to a five-year high. The average rate on a 30-year fixed rate dropped to 5.18% last week. What does that mean as far as potential savings? On a $165,000 loan, the payment would be $906 with current rates, down from over $1000 a month just a month ago.

So how do you know if refinancing is right for you? Try this Mortgage Refinancing Calculator. It will tell you what your new monthly payment will be as well as how much in interest you can save over the course of the loan. That way you will know if refinancing is right for you.

As 2008 wraps up, it’s time to start thinking about taxes. There is some good news out there for homeowners. Recent tax law changes could mean new tax breaks for you, according to this article from Kiplinger. Here’s a rundown of the potential tax breaks:

First-Time Buyers

If you bought your home after April 9, 2008, or even during the first part of 2009, you may be eligible for a tax credit equal to 10% of the purchase price, up to $7500. It works like a tax-free loan that must be paid back over 15 years. To qualify, individuals must meet income requirements and if you move before the 15 years is up, you have to repay the loan in full.

Non-Itemizing Homeowners

If you don’t itemize, here is another tax break you can take advantage of. It’s a standard deduction of $500 for individuals and $1000 for married couples. The purpose of it is to offset real estate taxes that you would be able to deduct if you itemized your tax return. This could be a good option for those that purchased homes late in the year and don’t have enough interest paid to make itemizing a good choice.

Homeowners Paying PMI

If you didn’t put down at least 20% of your home’s purchase price, chances are you’re paying PMI, or Private Mortgage Insurance. If you made PMI payments in 2008, and your income is less than $50,000 as an individual or $100,000 as a married couple, you can deduct 100% of your PMI. Your home must have been purchased or refinanced since January 1, 2007.

DC Homeowners

Congress also extended a tax credit for home buyers in the District of Columbia. First-time homeowners are eligible for a tax credit of up to $5,000.

I can’t tell you how much I’m looking forward to this weekend. The past six weekends or so have been spent working on home renovation projects. My husband and I bought a “fixer-upper” back in August and have been putting all of our energy into getting it in shape. Like most people, we are on a budget and have been looking for ways to save money through this entire process. I thought I’d share a few of the methods we have used:

1. DIY: this is kind of a no-brainer, but honestly we have surprised ourselves with how much we really can do on our own. Simple wiring, painting and even installing molding have turned out to be pretty simple projects. And I’m sure we saved a lot of money doing it ourselves.

2. Affordable Labor: For the projects that were over our heads we have used a handyman. He’s a certified electrician, plumber and can pretty much do anything. He has been extremely affordable and reliable which can be a huge battle in home renovation projects. My suggestion is to ask around at church, in your circle of friends, or at work for recommendations for affordable handymen. Don’t just rely on the phone book and chance to find someone good.

3. Get Quotes: For a couple of projects we got quotes from different sources. One of those was to install glass tile on our kitchen back splash. There was a $500 difference in price! That’s not a small amount of money. But we may have missed that opportunity to save if we hadn’t gotten quotes.

4. Pay Attention: When we ordered the tile for our back splash we had the tile company come out and measure– it’s a free service. They told us we needed 25 square feet. Just to make sure that was accurate my husband decided to measure it as well. According to his calculations, we only needed 19 feet of tile. Curious about the difference, he called up the tile company and told them he felt there had been a mistake. They argued that no, we would only have one extra tile just in case something were to break. But when the job was complete we were left with six whole tiles and $20 a piece that adds up to $120 of extra tiles! Thankfully we were able to get that money back because my husband had paid attention and doubled checked.

5. Use Coupons: I am ALWAYS on the lookout for Home Depot and Lowe’s coupons. I have several 10% off coupons that I have stocked up. We try not to run to Home Depot or Lowe’s for just one or two items. We try to buy several things at once so that 10% off coupon has more value.

While we may be almost finished with the main floor, we still have an attic to convert into a master suite. I’m sure by the time that project is complete we will have many more ideas for saving money.

There is a financial crisis in the United States that could possibly affect the whole world. Unless you are living in a bubble some where without access to communications “and if you are reading this then that is likely not the case” then you know there is a problem. Just yesterday the news was talking about how impossible it was for anyone (or any company) to get a loan in today’s market.

Never fear - there is a way. Many local banks and smaller companies did not get into the troubled mortgages. Their finances are sound. If you don’t bank with your local businesses then now might be the time to start.

I spent some time yesterday talking to a financial advisor in one of my local companies. Her recommendation was that people needing loans go to the smaller, typically stronger at this moment, local banks. She did warn that everyone is clamping down on loans. It takes more documentation to prove your repayment abilities and the process may take a little longer as well.

Although things may seem tough at this moment, it is still possible to get a loan. Keep your credit rating up and look to your local banks to find your financial loan needs.

The mortgage bailout is big news these days. But for millions of Americans– it’s not their problem. Why? Because according to the Census Bureau, 31.8% of Americans don’t carry mortgages on their homes. USA Weekend published an interesting article about the millions of Americans who don’t or can’t borrow money. According to the article, 23.8 million of the country’s 75.1 million homeowners had no mortgage on their home in 2006. And those households without mortgages probably aren’t who you think they are. Check out these statistics: 81% of homeowners with an annual household income of $150,000 or more had mortgages in 2006, while 38% of those earning less than $10,000 a year had no mortgage. While those with lower incomes may be less likely to carry mortgages, another group that may not be as impacted by the mortgage crisis are the elderly.

Homeowner’s Insurance is not everything that it is cracked up to be. Many people think that once they purchase the policy everything is protected. But not only is everything NOT protected, but it is likely that even your home is not protected under some conditions. This is one of the reasons that it is so important to read the details of your insurance policy.

Taking the time to read over your policy will help you understand what is covered and when. It will also give you guidance for purchasing additional insurance to cover the items and situations not protected under the current policy.

1. Jewelry, antiques and artwork - most homeowner’s insurance policies will only cover a small amount for these items - if they are covered at all. It may be worth the investment of a few extra dollars to get additional coverage on personal property. You will also want to get appraisals for the items and keep those appraisals in a safe location (away from your home in case of disaster).

2. Floods - basic homeowner’s insurance DOES NOT cover water rising in to your home. You need to invest in flood insurance if your property is located in a 100 year flood plain.

3. Other natural disasters - some policies may not cover earthquakes, volcanoes or even hurricanes (depending on your location). You may need to get additional coverage for protection against such events.

The time to know what is covered and how it is covered is before a problem occurs. Sit down with your insurance agent today and review your coverage. Then consider purchasing the additional protection you need to secure your future.

There has been a lot of focus on subprime mortgages over the last several months. So much attention has been cast that even congress has stepped in to make things right. But I recently had the chance to sit down with someone in the industry who has the job of dealing with the troubled situations and he told me that the majority of foreclosures that he is dealing with now are NOT subprime.

The more I thought at about the foreclosure rate and the more I thought about consumer debt in the United States then the more I came to realize that the problem isn’t in the lending industry, but is more likely in the borrowers. Here are some tips to help YOU avoid the foreclosure trap.

1. Always borrow less than you can afford to borrow. By keeping your debt to income ratio a low number you will be able to afford those unexpected situations that often come up when you are just living your life.

2. Always borrow less than the property is worth. There is no way to guarantee that the housing market will remain high, so keep your borrowed amount to at least 80% of the current market value.

3. Always buy with the intent to sale. Keep your eyes on the location, the amenities and the other characteristics that make it possible to sale a home. Things change, even when you don’t plan for them to change, and having a strong location will help you sale if you have to sale.

4. Always treat the home like you plan to live there for generations. Maintenance of the home will help hold its value and will help keep down costly repairs.

There is so much you can do to help keep your home from falling into foreclosure. Keep in mind that it is not just the subprime mortgages that are running into problems. Everyone that has bit off more than they can chew are finding that the mortgage industry is now chewing them up and spitting them out.

It’s no secret that people are not making money in real estate like they used to. As I mentioned earlier, I just bought a home. It’s a three bedroom, one bath, brick home in a nice neighborhood. That’s where the list of good qualities ends. Currently the home has no appliances, holes in the drywall, and an unfinished attic. We hope that by the time we are done with the home it will have been a great investment, but it could also be a huge money pit.

I’ve been researching the best places to invest your money when it comes to home improvements. Based on data that shows what will get you the best return on your money, here is where we plan to spend the most:

1. High end appliances and new counter tops in the kitchen
2. Adding square footage by completing the attic
3. Adding a second bathroom in the attic to create a master suite
4. Landscaping
5. Installing an electric garage door
6. Adding a wooden deck to the side of the home

By the end of our hard work our 80-year-old home will seem new, but with the benefits of being in an established neighborhood.

After four months on the market, we closed on the sale of our home last week. Despite news reports that make it seem like no one is making money in real estate these days, we walked away with a 36% increase in sale price compared to when we purchased the home less than four years ago. That gave us plenty of money to put 20% down on a new home plus about $30,000 left over for renovations.

According to a news report from CNNMoney.com, in the 12 months that ended June 30, nearly one-fourth of all homes sold nationwide actually sold for less than the price sellers originally paid, a statistic provided by real estate website Zillow.com. Here are some examples of real estate markets where homes sold for less than what the owner originally paid for the property:

* 63% of owners in Merced, California sold their home for less than the original purchase price.

* 63% of owners in Stockton, California

* 60% of owners in Modesto, California

* 55% of owners in Las Vegas

* 38% of owners in Phoenix

I feel blessed to have been able to make such a great investment, especially when others have experienced financial burden during this time. But I also know that I made some smart moves:

* I bought the cheapest house in one of the most desirable neighborhoods in my community.

* The house was far from perfect when I bought it. (Think gold shag carpeting and 70’s wallpaper.)

* I didn’t buy the home based on emotion, but instead thought of it as an investment.

Now begins the fun task of renovating our new home. We purchased it last week for $27,000 less than it’s current appraised value. It didn’t have any appliances, a toilet or even a single working sink, but I have a feeling it was a good move. I’ll let you know for sure in about three years when I go to sell it.

It may seem like a blessing, but the housing bill is not all that it has been made out to be. Homeowners will not receive the relief they were hoping to get from the legislation. But there are some good points to the plan.

1. Tax credit - not quite. Homeowners can receive a tax credit of up to $7,500 for the purchase of a new (first time) home in 2008 thru July of 2009, but it is not exactly free money. Instead the ‘tax credit’ will have to be paid back to the government over the next several years.

2. New standard deduction - this if for those people that do not itemize deductions can now deduct qualified real property taxes.

3. More information to the IRS - in the past the IRS was required to get a subpoena to look at bank records but the housing bill virtually skips that step. Now the IRS will receive a statement of your total merchant credit card gross receipts for the year. It is the government’s attempt to go after the online income.

It seems that the help the government is offering has more catches than it does relief. The good news is that many of the provisions provided through the housing bill will not take effect for several years. The bad news is that the help many homeowners were looking for just doesn’t seem to be there.