At this point in time, many of us wish that we did not have a mortgage on our homes. If that were the case, we wouldn’t have to worry about foreclosures and we’d be comfortable knowing that we were safe in our home environment.

Today, approximately 31.8% of homeowners do not have mortgages. I doubt that anyone would have guessed that the number would be that high. The other surprising fact is that the majority of these mortgage-free homeowners are low income families, not the wealthy. They live on extremely tight budgets and often do not even carry health insurance.

The rich generally carry high mortgages because of the tax benefits available to them. When you consider the tax deductions, it’s the least expensive way for the homeowner to borrow money. The typical family of four with an annual income of $100,000, who purchases a $500,000 home, can realize a tax savings of almost $6,000. This would be true if they obtained a mortgage for 80% of the home’s value at a rate of 6%. If they actually had this $400,000 and invested it in a mutual fund with a 10% return, they would have made a very wise financial move.

The low income family who eventually may become mortgage-free, generally purchases an inexpensive property, many of which frequently do not qualify for mortgages. Mobile homes, for example, will not generally qualify for a conventional mortgage. People with low incomes who may well have a shaky credit history, will not qualify for a mortgage. People in these situations generally will turn to relatives to help finance their home, paying them back over time. Eventually, they will become mortgage-free.

In addition to the very low income group, many others who are mortgage free have long been against carrying debt. Still others without house debt are the elderly because they have either traded down to smaller homes, or have long since paid off their original 30-year mortgage.

Home improvement companies are a large part of the economic picture. Many people are not do-it-yourselfers and hire people to maintain their home. This has been the case for many years and the home remodeling industry is very large. Suddenly, the market has shrunk and there is not enough work to go around.

Homeowners who are interested in remodeling are finding that it is a buyer’s market. Business is slow and contractors are often forced to cut expenses such as forfeiting their health insurance plans. A good number of them are willing to cut their prices just to obtain work. Many homeowners are scaling down their plans. A family considering remodeling a bath, for example, will settle for a new vanity and a coat of paint. The larger jobs are being put on hold as people consider the impact of their investment and whether or not they will get their money back when they sell.

Estimates are that investments n home improvements and maintenance is expected to drop 4% this year compared with 2007. It is also anticipated that 2007 levels will not be seen again until 2010. Meanwhile, many contractors are trying to survive in this new environment.

Companies catering to high end clientele are surviving and profitable, however, it is those who cater to the middle income homeowner who are feeling the pinch the most.

It will take a recovery in the housing market in general to improve the situation in the home improvement and remodeling industry. We are all hoping that this is just around the corner, but realize that it may take some time to materialize. Meanwhile, contractors, as so many others, will just have to try to hang on and be ready for the upswing when it does come.

If you are purchasing your first home, the government is providing assistance. This help from our government also applies to anyone purchasing a home who has not owned a house during the past 3 years. If someone was renting or living with family during this three year period, this new tax credit will be available to them, too.

The new credit being made available extends only to purchasers who buy a home between April 9, 2008 and June 30, 2009. This is our government’s attempt to create activity in the housing market while helping numerous people become homeowners. Any home purchase will qualify whether the home is new, old, or in need of repair.

If you are able to close on the purchase of a home during this specific time period, you will be eligible for a credit of 10% of the purchase price, up to a maximum of $7,500 ($3,750 if you are a single person) against your federal tax liability for 2008 or 2009. This is what is referred to by the government as a “refundable” tax credit. “Refundable” refers to the fact that if you owe the government a specific amount in taxes and it is less than the “refund” you have qualified for, you will receive the difference in cash from the IRS. This would be a great source of funds for getting settled into your new home and providing a few of the new home purchases that everyone needs.

Unlike many others, this tax credit contains a clause stating that beneficiaries must repay the money to the government. Beginning in the second year of homeownership, taxpayers are expected to begin making regular payments to the government when filing their federal tax returns. The payback period may be extended up to 15 years as long as regularly scheduled payments are being made.

As with any law passed by our government, there are many exceptions, qualified clauses, etc. so be certain to consult a financial adviser or your accountant regarding your specific qualifications for this new tax credit.