Home buyers who want to claim the federal home buyer tax credit might want to think twice before they set their hearts on a short sale home. 

That’s because the deadlines for the tax credit aren’t far off, and short sales are notorious for delays.  

First, the deadlines: To claim the tax credit, which can be worth up to $8,000, home buyers must sign a binding contract to purchase a home by April 30, 2010, and close the transaction by June 30, 2010. (Some U.S. military and intelligence personnel have an extra year to meet those deadlines.) 

Second, the short sales: A short sale means the seller owes more than the home is worth and wants the bank to write off part of the mortgage at the time of the sale. Banks are extremely reluctant to approve these write offs, even if the seller has lost money on the investment. Typically, sellers must prove they’ve suffered a severe financial hardship and aren’t able to pay the mortgage by any means. Sellers also usually must sign what’s called a “hardship letter” to that effect.

The lender’s reluctance, whether understandable or not, tends to cause long delays in the short sale process. The lender needs to evaluate the borrower’s ability to pay the mortgage, estimate the likely proceeds from the sale of the home in the event of foreclosure and make a call on whether to write off part of the seller’s debt—or not. A second mortgage or home equity line of credit can make matters even more complicated. 

It’s an unfortunate irony for sellers whose situation genuinely merits the relief of a short sale, but the fact is that while the bank dickers with the paperwork, the clock ticks on the buyer’s tax credit prospects. For that reason, buyers may want to avoid homes that aren’t liable to such delays, especially as that April 30 binding contract deadline approaches.

Recently, I posted on the offer my husband and I made on a foreclosure. Our offer was accepted. Our mortgage application was not. We were turned down by four different lenders, including FHA and Fannie Mae and two banks with which we do business.

One of the banks at least ran our credit before declining our application. Our credit score topped out at 770. We have more than ample income to make the mortgage payment. In fact, it would have been less than we're currently paying in rent. We have owned real estate since 1980. We wanted to borrow $120,000 on a house with a current tax assessment of more than $170,000.

We did not qualify for either the FHA or Fannie Mae loans, which were rehab loans that would roll the cost of repairs into the mortgage. The reason we were given was that we have too many mortgages. We do have a lot of mortgages; we own six rental properties and our personal residence, which has been rented out since we moved to another city last year for my husband's job. Everything is occupied and generating income. Under the old rules, we would have been fine, the lender told us. But the rules have been tightened and limit you to having no more than four mortgages.

We were more perplexed by the response from our local bank, with which we have done business for years and earned them quite a bit of money. With them, we got tripped up on our income. They told us they would have to go off our 2008 tax return, which is the last one that is completed (we're still working on 2009 - it gets complicated with the rental property and my freelance business). In 2008, I was working full-time as a senior editor at a national trade magazine, and doing a very small amount of freelancing on the side. Since I was laid off from that job in 2009, they backed my salary out of the income figures, leaving me with just that year's freelance income. They also were going off my husband's 2008 salary; he's since gotten a job that pays considerably more. We thought that if we dashed through the 2009 taxes and got them finished, it might make a difference.

It didn't. The last word we got was that we'd need to show them about $100,000 worth of combined income for 2009 to qualify for a $120,000 loan. I still don't understand the rationale behind that equation.

But hey, at least they talked to us. The other bank, with which we currently have personal and business accounts, wouldn't even call us back to finish the application. In the meantime, the window for signing the contract closed. I doubt our real estate agent will ever speak to us again.

Part of this is our fault. I've certainly written about real estate long enough to know the importance of being pre-approved for a mortgage before you go looking at houses. But we look at houses all the time. This was a deal that popped up unexpectedly, and it was an outstanding opportunity. And it honestly never occurred to us that we wouldn't get approved. My husband bought his first house when he was 19; we've owned real estate ever since, and never had any problems in getting financed. 

We're bummed about this turn of events; it was a great house for us. And we're okay with the fact that unless we hit the lottery, we're going to be renters for the foreseeable future, or until we can sell some or all of our properties. We shouldn't have to do that, though. They're doing what they're supposed to do – making money for us.

In the meantime, it gives me an answer to the question that I've been asked hundreds of times in the last couple of years, which is, "When is the housing market going to recover?" I can tell you when it will recover – when banks start lending money again to people with good credit and sufficient income to buy a house.

With the economy these days, more people are finding themselves working from home – either through their own businesses, or through temp work.

While you may miss the camaraderie of your coworkers while working from home, there are several pluses to working from a home office – among the highest, I think, being the lack of a dress code or a commute. Then of course, there are the tax deductions.

Workers who have an office space at home that they exclusively or regularly use for business purposes (e.g., not your den or family room) can benefit at tax time. That's because the federal government may allow you to write off things like property taxes, home repairs and your heating bills.

To find out whether you can claim any deductions for your home office, check out guidelines from the Internal Revenue Service at IRS.gov.  Before you get started with claiming your deductions, you'll have to figure out what percentage of your home your office occupies. For example, my home office takes up nearly 7 percent of my home's square footage. That means that the business percentage of my home's operating expenses is also about 7 percent, according to IRS standards. The IRS offers tips on how to calculate how much of your home's expenses (for heating, lighting, etc.) can be claimed as business expenses for operating your home.

Now, even with all the tips available from the IRS on what can be deducted and what can't for a home office, I am not confident enough in my mathematical skills to do the calculations myself. So that means that as soon as I finish writing this post, I will be making a trip to the post office to get all the needed documents to my accountant – and let him figure it out.

Sharon Stone is looking to sell her Beverly Hills, Calif., home for $8.995 million – which is a staggering $2 million less than what she paid for it nearly four years ago. The actress bought the house for $10.995 million in 2006, but has never lived in it, says blog, Real Estalker. She has taken the property on and off the market multiple times, Real Estalker says.

I found the listing for Stone's home at postyourlistings.com. The walled and gated Mediterranean home sits on about 5 acres and features seven bedrooms, a pool, a tennis court and a guest house. From the photo tour, it's obvious that the actress has never lived in the house, because it is completely empty. (With her unsuccessful sales history with the house, you'd think she'd at least invest in a good home stager to get the property sold more quickly.)

Which makes me wonder why she ever bought the house, and why she would want to sell it in today's still ailing real estate market. I haven't seen Stone in the movies much these days – perhaps that's one reason she's looking to unload her manse. But I did read a Huffington Post piece about how Stone recently posed topless for a French mag – at the age of 51. If she has the guts to do that, I guess losing $2 million on a home doesn't daunt her.

My husband and I are decorating a spare bedroom for our daughters to share, and he is nearly finished with painting the walls. We'd like to add a little bit of decoration to the walls without going to the trouble of adding a wallpaper border, so I am thinking about investing in some cheap wall decals to add a little interest to the room.

I've already used wall decals before -- in my daugthers' bathroom, I added lion, giraffe and hippo-themed decals to the walls to complete a jungle theme. Luckily, the decals haven't fallen off yet (they've been up for about three years), and my daughters love them.

I like the idea of decals that can easily removed -- I've already wasted a few dollars in paint, since my daughters' paint colors changed before we were able to get the paint on their bedroom walls. I certainly don't want to be scratching off a wallpaper border a few months from now.

For my daughters' new bedroom, I have star decals in mind  (we're adding glow-in-the-dark stars to the ceiling). Once their room is done, I'd like to paint my home office. I love birds, so I thought that this sophisticated graphic of a bird-filled tree would be perfect. But, I might also check out the Roommates collection of wall art and decals.

The wall decals seem great, since it doesn't appear that they require a lot of skill to put them up.

Readers: Have you ever used wall decals to decorate a room? How were the results?

The Los Angeles home of actress Brittany Murphy ("Clueless," "Girl, Interrupted,""Happy Feet,")  is now on the market for $7.25 million. The home is where the young actress, 32, unexpectedly died Dec. 20 last year after collapsing in the shower.

The West Hollywood house, which Murphy purchased from Britney Spears for just under $4 million in 2003, was put on the market by Murphy's mother, Sharon Murphy, according to website TMZ. The title is held by a blind trust whose sole trustee is Murphy's mom, TMZ says. It notes that the actress left all of her assets to her mom. (Even though Murphy was married at the time of her death, to British screenwriter Simon Monjack.)

Built in 1997, the 8,000-square-foot five-bedroom home has city views, a swimming pool, an office, a gym, motor court and a four-car garage. Aitan Segal of Rodeo Realty has the listing.

Monjack maintains that he's not unhappy about being left out of the will and that he had intended not to be included, says EOnline.com. "It was one of the conditions I married her with," he told EOnline. "I knew I would never want for money, and Brittany's high-earning days were a few years behind her. I had not helped build her income the way Sharon had, and I just felt that Brittany's money was rightfully Sharon's if God forbid anything ever happened to Brittany."

Monjack and Murphy's mom both will be relocating to Manhattan after the sale (to separate residences), the website says.

Pending home sales saw a dramatic decline in January, causing some analysts to wonder whether the housing market is making less of a recovery than what was believed.

In January, the National Association of Realtors' Pending Home Sales Index fell 7.6 percent from December to a seasonally adjusted 90.4, which is 12.3 percent higher than January 2009's 80.5. January's index was the lowest reading since April, notes the New York Times.

The index is a forward-looking indicator based on contracts signed and measures how many people agreed to purchase homes in January. 

NAR chief economist Lawrence Yun says the decrease is likely due to the harsh winter weather we've been experiencing this season. “January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit. Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the U.S., hampered shopping activity in February,” he said.

Which is understandable. However, as the Times points out, the decrease wasn't limited to the Northeast, which has been hit hard by the winter season this year. The largest month-to-month decrease was in the West, which saw a 13 percent drop in sales. Meanwhile, the Northeast saw a 9 percent decrease and the Midwest and the South saw 2 percent decreases. Taken together, this would seem to indicate that the weather isn't totally to blame for January's weak sales; the real estate market must be seeing less of a recovery than we had hoped. Among the troubles that the real estate market continues to face are high jobless and foreclosure rates, the Times says.

Which makes the following statement by NAR's Yun surprising. "We will see weak near-term sales followed by a likely surge of existing-home sales in April, May and June,” he said. “The real question is what happens in the second half of the year. If there is sufficient job creation, housing can become self-sustaining with stable to modestly rising home prices because inventory has been trending downward.”

I think he's right that much of how the housing market will do come spring will hinge on the job market, but I am not seeing how he can predict a surge in sales come April. Especially since the jobless rate is expected to hold at 9.5 percent by the end of 2010, according to the Associated Press. I'm thinking that NAR's prediction of a grand spring rebound in sales is far too rosy.

Readers: What do you think? Will the housing market see a significant increase in sales come spring?

The federal government is about tointroduce a new relief plan for homeowners who can’t afford theirmortgage payment or qualify for a loan modification. The plan is theHome Affordable Foreclosure Alternative, which is supposed to ease thesehomeowners into a short sale or deed in lieu of foreclosure.

The concept might sound good to homeownerswho need to sell or walk away from their home and want to avoid theblack mark of foreclosure on their credit history. They’ll also get$1,500 in relocation money from the government. But the plan is limited,and the rules are restrictive.

The mortgage has to be in or near default.The house must be a principal residence. Any second lien must be paidoff or negotiated away, so the homeowner can deliver clean title. Andso on and so on.

The plan is supposed to start April5, 2010, and end Dec. 31, 2012. Homeowners are encouraged to call theusual suspects: the lender, loan servicer, government hotline and government-approvedmortgage counselor for help.

More information about the loan refinancingand modification program can be found on the government’s Home Affordable ModificationProgram (HAMP) website.Those who want details about the short sale and deed-in-lieu options,which are part of HAMP, can consult the 43-page directive for loan servicers.

Anything that helps even a small numberof struggling homeowners get through a bad situation has to be good.And short sales and deeds-in-lieu historically have been a reasonableway out for borrowers and lenders.

But I have to wonder how well thisnew plan will work, given the complicated rules. Homeowners who areabout to lose their home may be more worried about hoarding their cashand finding a new place to live than whether the effect on their creditwill be a ding or a dent.

Not many people are happy with their real estate agents these days, according to a survey recently released by the California Association of Realtors. Of those people surveyed about their real estate agents, only 22 percent were happy with them, CAR found.

You can thank the economy for home sellers' perceptions of their agents. "The reasons for being dissatisfied with their agents were more closely related to market conditions than to agent performance," CAR told the Orange County Register. CAR found that 64 percent of sellers thought their house took too long to sell, and 51 percent didn't get the price they wanted.

On average, in 2009, homes went for $20,958 less than their original asking prices, according to CAR data. Also, the median difference between selling and listing prices was $32,315.

Older houses need lots of upgrades. Sometimes, these new components fit into the existing structure quite well. But other times, things can go wrong when a new component is attached to an old house.

A case in point would be the vinyl windows that were installed on my house seven years ago. The windows were a necessity because those that were on the house when I bought it had been installed when the house was built in 1941.

The vintage windows looked great, but they were drafty and the locks were broken. The bathroom window could be opened from inside the house, but closing it meant going outside and giving the pane a push since the handle no longer functioned. Most of the screens were missing, damaged or ill-fitting, so an open window let in a myriad of insects. Replacement parts were not an option since the windows were 60 years old. 

The new windows seemed fantastic. They kept out the cold and heat. The opened, closed and locked. They reduced glare and screened out damaging sun rays. Best of all, they blocked out the hum of traffic and the roar of lawn mowers, hedge trimmers and leaf blowers.

The bad news was that two of eight windows leaked. The leaks were slow, but over the years, the windowsills crumbed and the plaster felt damp during a storm. Not good.

Fortunately, the original contractor stood by the work. A repair crew came out no fewer than four times first to reseal the windows and then to take them out and reinstall them. So far, the plaster has stayed dry.

The experience taught me a few lessons. It’s worth a little bit more money to hire a reputable contractor who has been in business in the community for a long time. Always keep the paperwork that describes the job. Even if the warranty has expired, a reputable contractor may honor it. Be polite and you may get better service.

Editor's note: Read about blogger Lauren Baier Kim's leaky windows and even more leaky windows at Cyberhomes.com.