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The 15-year FRM this week averaged 4.58 percent with an average 0.7 point, down from last week when it averaged 4.61 percent. A year ago at this time, the 15-year FRM averaged 5.34 percent. The 15-year FRM has never been lower in the life of Freddie Mac’s weekly survey, which dates back to 1991 for the 15-year FRM.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.96 percent this week, with an average 0.7 point, down from last week when it averaged 4.98 percent. A year ago, the 5-year ARM averaged 5.67 percent. The 5-year ARM has never been lower in the life of Freddie Mac’s weekly survey, which dates back to 2005 for the 5-year ARM.

One-year Treasury-indexed ARMs averaged 4.85 percent this week with an average 0.6 point, down from last week when it averaged 4.91 percent. At this time last year, the 1-year ARM averaged 5.24 percent.

"The Federal Reserve’s announcement that it intends to purchase Treasury securities over the next six months caused bond yields to drop and mortgage rates followed," said Frank Nothaft, Freddie Mac vice president and chief economist. "Rates for 30-Yr FRMs peaked last year at 6.63 percent on July 24th. With this week's 30-Yr FRM, the interest rate difference is almost 2 percentage points, which amounts to a savings of about $225 in monthly mortgage payments for a $200,000 loan."

"And potential homebuyers are taking notice of these historically low mortgage rates. Both new and existing home sales rose 5 percent in February. First-time homebuyers accounted for half of all existing home sales, according to the National Association of Realtors®. In addition, mortgage applications for home purchases consecutively rose over the first three weeks in March, based on figures published by the Mortgage Bankers Association."

Pushed by a powerful combination of historically-low fixed mortgage rates, an $8,000 tax credit, and affordable prices, sales of existing homes jumped 5 percent in February compared with the same month last year.

The biggest gains came in the Northeast, where sales were up by nearly 16 percent, according to the National Association of Realtors.  Home sales in the South came in at 6 percent, 3 percent in the West, 1 percent in the Midwest.

Nationally, sales of condos rose faster than detached single family dwellings, 11.4 percent versus 4.4 percent.

Underlying the improving sales picture were continuing declines in median sales prices driven by high rates of distressed sales in California, Florida, Nevada and parts of the Midwest.  In some areas the increases in sales were far more impressive.  In south Florida, sales were almost off the charts, up 68 percent for detached houses and up 71 percent for condos.

A sharp spike in sales could accelerate our recovery. Buyers are starting to think that prices are where they should be and that the market is near a bottom.

Meanwhile, mortgage rates continue on their sharp downward track, hitting six-decade lows last week. Fixed rate thirty year loans plunged to an average 4.6 percent with 15-year rates sunk below four and a half percent according to the Mortgage Bankers Association. 

We may be pretty close to a cyclical low point in the financing cycle. 

Now is the time to get off the fence and buy.  Why?

It's a combination of things. For the buyer considering a purchase, the right ingredients are at hand.  Today, right now, is the time to act. Here's why:

Mortgage rates are low, lower than they have been for many years. In fact, they're approaching historic lows! Yes, you actually have to qualify for a loan now. But I guarantee you there are lenders out there who are ready, willing, and able to lend you mortgage money at very attractive rates.

Inventory levels are high. Unfortunately for sellers, buyers have an enormous number of homes from which to pick. In many markets, inventory is at an all-time high. As a result, buyers no longer have to "settle" on a home that's not what they want.

Sellers are motivated. Whether they are in trouble with their financing, worried about their employment, or having to make lifestyle changes as a result of losses in the stock market, many sellers need to sell and are willing to negotiate accordingly.

First-time buyers can also get a $8,000 non-repayable tax credit from the government. And you can apply it to either your 2008 or 2009 taxes.

We may already have reached the bottom of the market. Some buyers are still waiting, trying to buy at the very bottom of the market. But, you never know you've hit the bottom until prices are on their way back up. And many buyers don't realize that an increase in their mortgage rate will completely eliminate any advantage they may have gained by waiting for prices to decrease by a few thousand dollars more.

Don't miss a huge opportunity.  If you are considering buying, begin to do research and get pre-approved.  Be ready so when you find the right home you will be able to move quickly.   

Your home can provide more tax relief than any other acquisition, thanks, in part, to new federal laws designed to help in the recessionary economy.

Building on a host of existing tax benefits for homeowners, new tax breaks help you save money when buying, owning or selling a home.

• Mortgage Forgiveness of Debt Tax Break:  When a lender allows the homeowner to forego repayment of principal and or interest the borrower owes and discharges the debt.  The amount of debt that can be excluded is limited to $2 million and the exclusion is only available for loans that were used to buy, build or substantially improve a principal residence.  Vacation homes, investment properties and other second homes don't qualify. The is a federal tax break that allows borrowers to avoid foreclosure, and related taxes, when they do a "short sale."  Previously, the forgiven portion could be considered income and taxed as such. The Mortgage Forgiveness Debt Relief Act of 2007, effective through 2010, removes federal taxes from forgiven debt for qualifying taxpayers.
• Mortgage Insurance Deduction:  The relief act also extends federal tax relief for qualified home owners who pay mortgage insurance. Qualified borrowers can deduct the full amount of their private or government mortgage insurance if their insured mortgage originates between 2007 and 2010.
• First Time Homebuyer Tax Credit of $8000:  This deal is for buyers or couples who have never owned a home or who haven't owned a home in the past three years. The tax credit does not have to be repaid. 
• Standard Deduction for Property Taxes:  Homeowners may claim an additional standard deduction for property tax if they do not itemize deductions. The additional amount is limited to $500 or $1,000 for joint filers. The amount is claimed as an additional amount on top of their standard deduction. The deduction is valid for the 2008 tax year only. 
• Interest:  Interest that is paid as part of a mortgage is also deductible and will remain so at the present time.
• Prorated Capital Gains Exclusion:  Under current law married homeowners can exclude from taxation up to $500,000 in gains from a home sale, provided the property was the primary residence for two out of the previous five years. The maximum exclusion for a single person is $250,000.  Vacation and rental property owners can legally double dip the exclusion by first selling their primary residence and capturing the tax-free gain. Then, after moving into the second residence for two years to qualify it as their primary residence, they are able to cash in again on the tax-free gain after selling the second home.  As of January 1, 2009 capital gains will no longer exclude the gain for the time the home served as a vacation or rental property. The exclusion will be pro-rated and will only be eligible for the time when the home served as a primary residence.  Homeowners who move into the vacation home before the end of 2008 will still be eligible for the benefits of the old law.  

Whenever it comes to taxes, be sure and see a professional.

Deduction:  A tax "deduction" reduces your taxable income. Less income to tax means less taxes to pay. For example, a $100 tax deduction reduces your $50,000 taxable income to $49,900.

Credit:  A tax "credit" is a dollar-for-dollar reduction in your actual taxes due. A $100 tax credit reduces your $1,000 tax bill to $900.