Mortgage applications are on the rise as interest rates fall. Even though mortgage interest rates are more dependent on the 10 year Treasury note than on the Fed funds rate, interest rates are still quite low. And many people are filling out mortgage applications in order to get in on the savings.

First time homebuyers

First time homebuyers can get great mortgage interest rates right now. A 30-year fixed rate is available for well under six percent. This means that you could save tens of thousands of dollars over the life of your loan. Variable rates are even lower, but at some time they’ll go back up. Now might be a good time to lock in a good mortgage interest rate.

With home prices down a bit, and with many homeowners eager to sell, now is definitely a buyer’s market. If you are looking to buy, you can find good deals in terms of home prices and in terms of mortgage interest rates. However, you should be planning to keep the home for a while, beating the current downcycle.

Refinancing to a fixed rate

The increase in mortgage applications is probably most popular among those wishing to refinance. Now is a good time to refinance. It is possible to get rid of your adjustable rate mortgage and replace it with a fixed rate. This might be especially helpful for subprime borrowers who are expecting a mortgage reset. If you’ve managed to bring your credit up to snuff, and you don’t have negative amortization, it could be a good idea to refinance.

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If you can avoid it, now is not the time to sell your home. It is definitely a buyer’s market, and if you can arrange it, it would be best to rent it out if you can’t live in it. If you must sell your home, however, there are ways to increase its appeal, and increase your bargaining position. At the very least, these tips for selling your home could help you get another couple thousand dollars for your real estate:

• Spruce it up. Spruce up your home with new paint. You can also change the window treatments so that they look fresher. Try neutral colors. Few people want to buy a home with a “custom” paint job. You can also spruce things up by adding plants and other attractive accents and “accessories” to your home.
• Stage the furniture. This can be a great way to show off the home. Have a professional stage the furniture so that it helps show off the size of the rooms. Furniture can be arranged to give the whole home a certain attractive feel.
• Clean up. Do the cleaning. Dust the light fixtures and get the cobwebs out of the corners. De-clutter all areas of the home. Now is a good time to get rid of what you aren’t taking with you. And it will help make the home more attractive.
• Maintenance. Make sure that things like electrical and plumbing are in proper working order. A home inspection by the potential buyer can scuttle the deal if you don’t have everything up to snuff.

• Upgrades. Consider adding things like energy efficient windows or remodeling the master bathroom. Upgrades can make a home more attractive and help it sell more quickly.

Even if you don’t get the price you want, if you aim to sell, and sell quickly, you will have a better chance using the above tips.

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Tax relief continues for homeowners in various forms for this 2007 tax season. Mortgage debt forgiveness is no longer considered income, and there have been some other points that should be made concerning tax relief. Look below and see if you can benefit from your private mortgage insurance premiums — or even from financial insolvency.

Private mortgage insurance

If you buy a home with less than 20 percent down, most mortgage lenders require you to get private mortgage insurance (PMI). A couple of years ago, new tax rules made it so that PMI premiums could be deducted like mortgage interest paid. However, these provisions were set to expire this year. Instead, the provision has been extended.

Insolvency can help you gain tax relief on a short sale

For homes facing foreclosure and homeowners hoping to avoid it with a short sale, the mortgage debt forgiveness tax rule doesn’t apply. Instead, homeowners in this position can prove that they are insolvent in order to avoid paying income tax. Inman News explains how to figure insolvency:

To figure out whether you’re insolvent (for IRS purposes) Burgess suggests using form 433F, which is the “Collection Information Statement.” (Download IRS forms for free at www.IRS.gov.) One side of the form lists all of the assets and debts. The other side lists monthly income and expenses. You can fill out the form online and then print it, or print first and work on it by hand. …

Add up all of your assets and then all of your debts. If your debts exceed your assets, you are insolvent by that amount. In other words, you’ve calculated your net worth, and come up with a negative number.

Before you file your taxes, realize that there are a number of new tax relief measures for the 2007 tax season. Either visit the IRS Web site for information or consult a tax attorney or accountant.

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