With housing prices and interest rates down, many people are wondering if now is a good time to be a first-time home buyer or upgrade to a "better" home. The tax advantages are certainly one reason to consider purchasing now. 

Looking at the housing market, First American CoreLogic and its LoanPerformance Home Price Index states that further declines in home prices, driven by distressed sales, are expected in the early months of 2010. This will be followed by a recovery this spring, but that is now projected to be much smaller and to occur later than previous forecasts stated.

If your're thinking of upgrading, be sure to factor in the fact that your house, along with most others, has also declined in value. Though you might get a "great deal" on the one you want to purchase, the person buying yours is probably also getting a "great deal" as well.

Besides the cost of the house, the mortgage interest rate is another factor to consider. According to a recent Freddie Mac Primary Mortgage Market Survey, the rates are currently around 5%. These rates are quite inviting. Just to provide a comparison, during the inflationary times in the 70's, mortgage rates were in the low teens. It wasn't unusual for people to pay 13%!

This could be the right time for your to make your move. Consider all the issues - tax incentives, interest rate and the declining values in the housing market. Talk to a trusted mortgage professional; they will help you sort through all the issues and guide you on this major financial decision.