Coldwell Banker reported findings from a new survey that looked at how the recently expanded federal homebuyer tax credut might impact the economy. 83% of 1000 homebuyers surveyed responded that if they were to purchase a home and qualify for the tax credit, they would engage in “smart spending” of the money. This means they would put the money toward paying off existing debts, home improvements, savings/investments, or everydayhousehold expenses.

According to the survey, 34% of homeowners said they would use the tax credit to pay off debts, followed closely by home improvements (29%) and making investments (28%).

In addition, Coldwell Banker found that 20% of homeowners indicated they were more likelyto consider purchasing a home than they were six months ago, after learning about the federal tax credit.

The National Association of Realtors recently reported that 47% of 2009 home sales were to first-time buyers, so clearly the initial tax credit worked. This survey offers positive indicators that there are more existing homeowners considering a home purchase today  than there were six months ago.

Interest rates on a 30-year fixed mortgage have dipped to an all-time low giving consumers a big reason to consider buying a home now. Freddie Mac recently stated that the average rate on a 30-year loan was 4.71% with an average .7 point. This is the lowest rate since the agency began it’s weekly tracking in 1971. A point is equal to 1% of the loan amount, payable in a lump sum at closing.

Rates are so low right now because since early January of 2009, the Federal Reserve has been purchasing mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac. In September, 2009, the Federal Reserve said it would wind down this purchase program by March 20, 2010. In a recently published mortgage survey, loan experts predicted that rates will increase in the next 30-45 days. For comparison, at this time last year, 30-year fixed rate mortgages were at 5.53%.

Regardless of the survey, the general consensus is that interest rates are super low right now, and they may be the lowest the market will see for a long time. Remember also that these very low rates are offered to the most credit-worthy consumers who can make a sizable (usually at least 20%) down payment.

So should you buy now? It all depends on your personal situation. Homebuyers have a lot of factors in their favor right now — low interest rates, plenty of competitively-priced homes for sale, and an extended and expanded federal tax credit that will expire in the spring.

On the flip side, there is some sentiment that housing prices may fall further. Lenders are expected to get more specific at determining which buyers will qualify for loan modifications. If they don’t agree to a loan modification, lenders will move homes more quickly through the foreclosure process. And home values may depreciate in response.

So it’s your choice. Take advantage of all of the factors in your favor as a homebuyer right now, or wait for prices to fall further. Either way, the first six months of 2010 should be a great time to buy!

Lawrence Yun, economist for the National Association of Realtors, predicted Friday that home prices would begin rising next year for the first time in 4 years, as reported in the San Diego Union-Tribune. He based his prediction, given before the annual convention of the NAR in San Diego, on low interest rates, low prices causing improved affordability, and the federal $8000 tax credit for first-time home buyers recently renewed by Congress. Forty percent of the buyers who used the credit were influenced to buy because of the credit.

Yun feels there is pent up demand of first-time buyers for homes, both new and resale. While prices should rise, it is also likely that mortgage interest rates will also rise slightly to around 5.7% from the current 5.2%.

Other experts, such as Patrick Nugent of IHS Global Insight, Michael Lea of the real estate center at SDSU, and James Hamilton at UCSD, are not as sure that prices will recover next year, although there is a consensus that we are near the bottom.

This is an excellent time to consider buying, with low interest rates, low prices likely to rise in the future, and the federal first-time home buyer tax  credit.

After two weeks of delay, The Senate voted to pass a seven month extension and expansion of the tax credit for homebuyers. The legislation should reach President Obama for his signature this week.

The current homebuyer tax credit is scheduled to expire on November 30th. This new bill would extend it until April 30th of 2010. First-time buyers who are in the process of making a purchase will still qualify for the $8000 tax credit even if they close after the November 30th deadline.

The expanded tax credit will allow more people to qualify for the credit. Move-up buyers do not have to sell their current homes to qualify, but the money must be used to buy a primary residence, not a vacation home.

The new legislation included provisions to address complaints of fraud. The IRS is given greater authority to oversee the the process to root out fraud, and provisions are added in response to past abuses of false sales or underage buyers.

The new legislation should continue to fire up the housing market and continue to bring new buyers into this fast-paced market.

Congress may be closer to extending the $8000 first-time buyer tax credit, but analysts disagree over the effect the extension may have.  One analyst, Robert Stevenson, said the Senate Committee’s proposal for extending the tax credit will have a “limited impact”on home sales.

Stevenson said that the main pitfall of the proposal is that it only pushes back the expiration of the tax credit to the end of April. He is skeptical that the extension will drive homebuyer activity over the slow winter months. He does agree that Congress could come back and extend it again.

Jerry Howard, President of the National Association of Home Builders, offers a different view. He believes that “failure to act now could derail the fragile housing recovery even before it has time to take root…the consequences would be devastating for both housing and the economy.” Homebuilder stocks were up sharply in the wake of the news of the Senate comprom,ise.

The compromise on extending the tax credit doesn’t mean it’s a sure thing, and the proposal still faces a vote in Congress. One potential snag is a recent government report that uncovered fraud and abuse associated with the tax credit. Thousands of ineligible taxpayers may have received millions of dollars under the program, according to the report.

On October 30th, the Wall Street Journal reported that a Senate committee has reached a compromise on extending and expanding the $8000 tax credit for first-time buyers due to expire on November 30th.

While the compromise still must be passed by the full Senate, this agreement would extend the existing credit for first-time buyers, while offering a new credit of up to $6500 for some existing homeowners. This reduced credit would be available to all homebuyers who have been in their current residence for a consecutive five-year period in the past eight years.

Washington lawmakers also raised the qualifying income limits to $125,000 for single taxpayers and $250,000 for joint taxpayers from the current $75,000 and $150,000. Under the Senate compromise, buyers must have accepted contracts by April 30th and closed escrows by June 30th.

The new provisions are aimed at broadening availability of the credit beyond first-time buyers and giving the weakened real estate market a bigger boost while preventing real estate investors from benefitting. While Senate lawmakers appear to have reached a deal on the substance of the tax credit, they are still at odds over how it would be brought to the Senate floor. The measure still faces votes in the full Senate and House.