A new law could provide an attractive housing option for many families near and around many military bases and shipyards.

While the biggest federal incentive for homebuyers expired for most consumers on April 30, members of the military could have an additional year to buy a home and claim the homebuyer tax credit.

The law allows service members another year to buy a home and claim the credit if they served on official extended duty outside of the United States for 90 days or more at any time between Jan. 1, 2009, and May 1, 2010.

Those members have until April 30, 2011, to sign a sales contract, and until June 30, 2011, to settle and close on the home. Both the $8,000 first-time and $6,500 repeat homebuyer tax credits are included in the rule.

“Congress recognized that many service members may have missed out on the homebuyer tax credit due to being posted overseas,” said Bob Jones, chairman of the National Association of Homebuilders. “It is only fitting that they be given another year to take advantage of this opportunity in appreciation of the sacrifices they have made serving our country.”

Typically, homes that are sold or that cease to be used as a principal residence within three years of the initial purchase are subject to recapture of the tax credit. However, qualified service members who sell or move from a tax-credit home within three years of the initial purchase due to official extended duty are exempt from the recapture rule.

“Qualified service member” means a member of the uniformed services of the U.S military, a member of the foreign service of the U.S., or an employee of the intelligence community.

For years, all military personnel on active duty have been eligible for help with their mortgage and other debt under the Soldiers’ and Sailors’ Civil Relief Act (SSCRA).

The act allows Reserve and National Guard members and other military personnel whose mortgage obligations pre-date the start of their active duty to cap their mortgage rates at 6 percent while they are on active duty. Other benefits of the act include a prohibition on lenders foreclosing against affected military personnel during, and three months after, their tour of active duty.

Since home-loan rates have hovered around 6 percent for several months, one of the most significant provisions of the act includes consumer debt. It limits the amount of interest that may be collected on all debts — not just mortgages — of persons in military service to 6 percent per year during the period of military service.

This provision applies to debts incurred prior to the commencement of active duty and includes interest on credit-card debt, car loans and other debts.

Another key provision under the SSCRA protects dependents from being evicted while service members are serving. If a service member rents a house or apartment that is occupied for dwelling purposes and the rent does not exceed $1,200 per month, the landlord must obtain a court order authorizing eviction.

This provision applies regardless of whether quarters were rented before or after entry into military service.

In cases of eviction from dwelling quarters, courts may grant a stay of up to three months or enter any other “order as may be just” if military service materially affects the service member’s ability to pay the rent.

This provision is not intended to allow military members to avoid paying rent, but rather to protect families when they cannot pay the rent because military service has affected their ability to do so.

Another significant protection under the act relates to civil proceedings. Service members involved in civil litigation can request a delay in proceedings if they can show their military responsibilities preclude their proper representation in court. Service members who are on an extended deployment or stationed overseas most often invoke this provision.

The Office of the Undersecretary of Defense for Personnel and Readiness emphasized that the provision applies to pre-service debts, and the interest-rate reduction doesn’t occur automatically — service members must request it.

Ginny, I’m buying a bank-owned condo and have signed to release all contingencies. But the FHA wants so many things signed by the HOA management company that it’s taking forever! We were supposed to have closed about six weeks ago, but the FHA keeps coming back and saying it needs something else.

The bank that I’m buying the property from is charging me $100 per day because we didn’t close on time. How can I back out of this mess? What can I do to get my $6,000 deposit back? –Carlos M.

Carlos, welcome to the not-always-so-wonderful world of buying a condo in a non-Housing and Urban Development (HUD)-approved complex using an FHA loan. Many people are not aware, but to buy a condominium with an FHA loan, not only must your particular unit pass FHA’s condition guidelines, but the actual complex must be approved by HUD.

There is a website operated by the federal Department of Housing and Urban Development, which administers the FHA loan program, with a searchable database for all FHA-approved condo complexes in the country.

But what about complexes that are not HUD-approved?

Until Feb. 1 of this year, there was a fairly simple process for obtaining an FHA “spot approval” of a complex — it was a simple form that required some information from the homeowners association’s management company and also required that the escrow holder document that fewer than 10 percent of the units in the complex were attached to FHA loans.

It was somewhat of a nuisance to get through, because in a larger complex, it was very work-intensive for escrow to pull all the trust deeds so they could verify the “less than 10 percent” FHA loan requirement, but it was generally not a deal-killer.

However, in an ostensible effort to “streamline” the spot approval process, HUD and FHA did away with spot approvals entirely this year. Instead, every time a buyer wants to finance a condo purchase in a non-HUD-approved complex, they must initiate the full process of having that complex become HUD-approved.

The upside? Every complex will have to go through this only once. The downside? HOA management companies across the nation were unprepared for this change, and are moving extremely slowly — if at all — to provide the documentation and signatures HUD requires to effect this approval and close these transactions.

As such, home purchase transactions across the country are being canceled or, like yours, severely impaired by the molasses-like pace of these approval applications and HOA managers’ responses to HUD requests.

But here’s the rub. You’ve already removed all your contingencies. I don’t know what state you’re in, but almost everywhere, removing your contingencies also renders your earnest money deposit nonrefundable if you cancel the transaction. First things first — decide if you still want to buy the place. If you don’t, and are willing to forfeit your $6,000, that is an option available to you.

However, if you do still really want the home, push your mortgage broker (your team member closest to the HUD approval process) to call in all the favors she can to get the HOA management company’s deliverables in. He or she will have much better luck exerting pressure there than on the HUD side of the equation.

Once that process is done, express to your real estate broker that you simply do not have the extra cash to pay a $100 per diem late fee on top of your downpayment and closing costs, as the bank is requesting. This late-fee provision is very common in REO purchase contracts, but I’ve also seen this waived by the bank/seller many times when they are made aware that the buyer (a) is not at fault for the delay, and (b) does not have the wherewithal to close the transaction if the late fee is imposed, but can close if the late fee is waived.

In fact, I’ve been involved in numerous transactions where the bank simply did not ask for the late fee, although it was in the contract, and they were entitled to it. Rather, banks generally wield the late-fee provision as leverage to get a buyer to perform; as a result, you are unlikely to get the bank to waive the late fee until you are in a position to close.

You are not legally entitled to your deposit money back. You can certainly ask, but it is very unlikely to happen. Accordingly, if you can get the management company’s signatures and materials in, it behooves you to do what you can to get the late fee waived and close the transaction. This is much more likely to happen than a refund of your deposit money.

However, you are not really in a position to request a late-fee waiver until your side is ready to perform by closing the transaction. So, to put first things first, have your mortgage broker or lender lean hard on the management company to respond quickly to the HUD requests

Mention the term “second home” to a dozen people and half will probably tell you that it is also an “investment home.” That’s because many second homes are actually investment properties that owners rent out a majority of the year. Others see a second home for family only, maybe a place for close friends, but not renters.

The Internal Revenue Service would like you to choose, especially before you plan to sell it.

The subject came up recently over spring break when friends were getting ready to sell a golf-course property via a tax-deferred exchange and buy another home that was in a quieter neighborhood and away from the busy entry leading to their present development.

“That’s great,” I said. “I’m glad you found a place where you can use the same golf course. Will you be able to rent out the new place as much as the old place?’”

“We don’t rent out our home,” the owner said. “Never have.”

I was confused. If the house was not an investment property, how could the owners be conducting a tax-deferred exchange? According to Section 1031 of the tax code, no gain or loss is recognized on the exchange of property held for productive use in a trade or business or for investment if the property is exchanged solely for property of like kind that is to be held either for productive use in a trade or business or for investment.

Personal residences can’t be exchanged tax-free under Section 1031 because they aren’t held for productive use in a trade or business or for investment.

It turned out that the owner “was told by an adviser” that a tax-deferred exchange was permissible because he had purchased the home with the idea that it would eventually appreciate. Because it did appreciate, that constituted “an investment” property.

It turns out that our friends were not the only ones thinking this way, and the tax court made a ruling two years ago that provides clarity in such cases.

In Moore v. Commissioner, two owners exchanged one lakeside vacation home for another. Neither home was ever rented. Both were used by the taxpayers only for personal purposes. The taxpayers claimed that the exchange of the homes was a like-kind exchange under Section 1031 because the properties were expected to appreciate in value and thus were held for investment.

The tax court held, however, that the properties were held for personal use and that the “mere hope or expectation that property may be sold at a gain cannot establish an investment intent if the taxpayer uses the property as a residence.”

The Moore case failed the Section 1031 tax-free exchange test for a variety of reasons, according to the tax court. First and foremost, the parties never even attempted to rent out the property. Plus, they failed to claim any tax deductions for maintenance expenses or depreciation connected with the properties and they claimed interest deductions on both properties as home mortgage interest rather than as investment interest.

Strict personal-use rules of the investment property as a “second home” still apply. The period of the taxpayer’s personal use of the dwelling unit cannot exceed the greater of 14 days or 10 percent of the number of days during the 12-month period that the dwelling unit is rented at a fair market value.

Some clarity regarding tax-free exchanges did come out of the Moore case. The IRS basically stated that it recognized owners do take personal-use days in their investment properties. The IRS said it would provide a “safe harbor” to a tax-free exchange as long as other exchange rules are met. Before the Moore case, there was no personal-use language in any exchange material.

Revenue Procedure 2008-16 officially allows limited personal use of an investment property and will not prevent a dwelling unit from qualifying as property held for trade or business or investment use for purposes of the tax-free-exchange rules. The procedure reads:

“… a taxpayer’s dwelling unit (real property improved with a house, apartment, condominium, or similar improvement that provides basic living accommodations including sleeping space, bathroom and cooking facilities) will qualify as property held for productive use in a trade or business or for investment for Section 1031 purposes even though they occasionally use the dwelling unit for personal purposes.”

So, take your pick and label your getaway a second home or an investment property. You can also hope they “appreciate,” but be careful how you apply the term.

Ginny, can I withdraw a contract on a short sale when the bank hasn’t accepted my offer and how long will it take? I made an offer on a short sale in February. I now want to move on and forget this short sale. I would like to just find a traditional sale. Is it possible to withdraw my offer without losing the earnest money since the bank never accepted my offer? Also, how long should the withdrawal process take from the time I submit it? –Janet, Cambridge, MA

Janet,  I see you using the terms “offer” and “contract” somewhat interchangeably, which might reflect some internal confusion on the subject of how short sales work. When you make an offer to buy a short-sale listing, the sellers must accept your offer, forming an actual, binding contract, before it can be submitted to the bank for review and approval (or not). So, what the bank is reviewing is not your offer, per se, but your contract and the rest of the seller’s workout application.

However, most states’ standard practices dictate that when you get into contract with a seller to buy a property that is a short sale, you and the seller also sign a short-sale addendum. The function of this addendum is to render your contract to buy the place contingent not only on the appraisal, inspections and your financing, but also the seller’s bank’s approval of the price and terms of the transaction.

And on every short-sale addendum that I’ve seen, the addendum also empowers you, the buyer, to back out of the transaction at any time before the bank’s approval comes in (and, actually, you would still have this right to back out, in most contracts, for up to a few weeks following the bank’s approval). So, yes, you can withdraw your contract on this short sale and move on to another property.

Be aware that, by doing this, you will forfeit your ability to qualify for the tax credit, because the deadline for signing contracts has passed. But the reality is is that if this transaction has already taken this long, you might not even be able to close it in time for the extended transaction closing deadline (September 30th) for the tax credit even if you did remain in contract and ride this thing out — and in the meantime, your life is on hold. This is precisely why so many buyers and buyer’s brokers hold short sales in some disdain.

It should be a fairly instant process to get out of this transaction. You sign a cancellation of contract. The seller signs it, too — they have some incentive to do this quickly, as they cannot ethically begin marketing the property for sale again until they have released you. It’s highly likely that your agent or their office still has your uncashed deposit check and can simply hand it back to you. If it was submitted to an escrow provider, which would be unusual, without the bank’s approval having come in yet, but not impossible, the escrow provider is required by law to refund your deposit immediately upon receiving instructions to do so signed by both buyer and seller.

You should have your deposit money back and be able to move forward with other properties within a very short period of time — a few days, if everyone involved acts as they should, but give it a week or so, to allow for people that may be traveling, weekends and the like.

Many of today’s borrowers, even those anticipating a smooth refinance, are having difficulty qualifying for a loan on their principal residence. Homeowners became so used to the quick turnarounds during the easy-money days that they are startled, and often upset, when they can’t receive the exact loan they want.

Second-home buyers also are being scrutinized because their income may have to cover two mortgages. Lenders simply are being more selective. With property values in some regions remaining flat, more emphasis is being put on a borrower’s income and assets. The lender has to make certain that the borrower has the means to repay the debt.

Recently, a couple made an offer on a lakeside home, mainly because the owners advertised that they were “willing to carry the paper.” The buyers preferred another home in the area, but did not meet the bank’s qualifications for a loan. They did, however, pass the sellers’ test and the deal worked out for both parties. The sellers were also correct in assuming their offer to provider seller financing would attract a larger pool of buyers, enabling them to fulfill their goal of selling the home by a specific date.

Seller financing, where the seller accepts a downpayment and then monthly payments, can make sense. Most of the time, seller financing works well for both sides, but both sides — especially the seller — should be prepared to handle the deal much like a small business. While the buyer can simply mail you a check every month, it’s up to you to craft the ground rules.

In many states, most transactions are now closed via a note and deed of trust; other states use real estate contracts. Few sellers, and even some agents, truly understand the difference between a real estate contract and the note and deed of trust. But the distinctions are important, and knowing the differences up front could save money and worry later.

Both a real estate contract and a promissory note secured by a deed of trust recorded against the title to the property permit the seller to loan money to the buyer. The main difference between a real estate contract and a note and deed of trust in most states is the time it takes to remove the borrower/buyer’s interest in the property if the borrower defaults.

The real estate contract, like any other contract, is subject to different interpretations, and runs a greater risk of disputes and litigation. The process of clearing the title can be time consuming and costly, especially if either party challenges the forfeiture. In order to avoid an even more complex procedure, the buyer usually has to be located.

The deed of trust foreclosure takes about 150-180 days, culminating with a trustee’s sale. The borrower/buyer may settle the debt up until 11 days before the sale.

Under a real estate contract, the seller continues to hold legal title to the property until the buyer completes his obligations (finishes making his payments). In the interim, the buyer gets possession of the property and is said to have “equitable title” to the property. Even though in most cases the seller delivers to escrow a fully executed statutory warranty deed, the deed is not recorded by the escrow until the debt is paid in full.

During the entire term of the contract, the seller is referred to as the contract “vendor” subject to the rights of the buyer to complete payment under the contract and to receive the warranty deed. The buyer is referred to as the contract “vendee.”

With a note and deed of trust, the seller delivers a statutory warranty deed to the buyer at closing. The buyer then owns the property, subject to the seller’s security interest (the amount of money still owed to the seller).

In addition to an easier foreclosure process, another advantage is that there is a greater market for the sale of the investment interest secured by the note and deed of trust. There are several national buyers for notes. (If you are holding a note, you probably have received offers to purchase the note from mass marketers.)

While it may usually take longer to obtain clear title under a note and deed of trust, the real estate contract can be more cumbersome. The seller also can incur the cost and delay of the court proceedings when using a real estate contract.

If you are participating in seller financing, make sure both sides understand what type of “paper” is going to be carried.

It’s not your father’s retirement scenario — that’s for sure.

And for many aging baby boomers, “retirement” won’t even amount to a real cessation of work, because many of the generation of 76 million babies born between 1945 and 1964 are now saying they plan to keep on working, whether from enjoyment or because they must.

Del Webb, a builder that specializes in housing developments for residents 55 and over, has conducted 10 extensive opinion surveys on the boomers since 1996, and says the famous population cohort has changed significantly over the years. The 2010 Del Webb Baby Boomer Survey found them considerably less interested these days in heading for the traditional Arizona/Florida locales — if they’ll move at all. And their reasoning for pulling up stakes has changed, too.

Five things to know about boomers’ retirement plans:

1. The last day on the job is going to hit later than it used to. The younger boomers, who are turning 50 soon, plan to retire a median of four years later than 50-year-olds who responded to the survey in 1996 — at age 67 versus 63.

Their reasons for the change are mixed, according to Webb spokesman Valerie Dolenga, who says the survey found plenty of people who like to work and want to continue, whether in the same kinds of jobs, as consultants, or some other field, part time or full time. Then there are those who just have to work.

“I was looking at the comments of those who answered the survey,” she said. “I was really surprised to see that it’s pure enjoyment for some of these folks.

“Then there are those who say, ‘Yeah, I need to work because my 401(k) has been hit so hard,’ or they can’t sell their homes,” she said. “Clearly, those factors are working in tandem.”

And then there’s this sobering admission: Boomers who are turning 50 this year are three times as likely to think they’ll never be financially prepared for retirement compared to older boomers — 41 percent today vs. 15 percent who said that in the 1996 survey.

2. The still-at-work decision will affect whether they’ll move, she said.

Among the older baby boomers (who started turning 50 in 1995), one-third plan to move in retirement; more than 50 percent plan to move to a different state, 25 percent to a different city within the same state, and fewer than 20 percent within the same town.

Younger boomers now are more interested in moving than their similarly aged predecessors were in the 1996 survey. About 42 percent of those turning 50 this year say they want to move in retirement, compared with 36 percent of 50-year-olds in the earlier survey.

3. But the ones who are planning to move some distance are changing the rules, the survey found.

“Florida has slid off the map,” Dolenga said. In the survey, the top two destination preferences were North and South Carolina.

The boomers still are lured by the promise of warmer weather, but the Carolinas, with occasional glimpses of the climate Northerners have left behind, offer a compromise, she said. The “halfback” phenomenon — retirees who have wearied of Florida for whatever reason and moved back up the Atlantic coast to the Carolinas — is real, she said.

A major influence: cost of living, according to the survey.

4. What they want once they get there has changed significantly, also, Dolenga said.

Boomers aren’t seeking some armchair idyll — they’re drawn to urban amenities such as shopping, restaurants and cultural amenities. And access to health care ranks very high for them now.

Another attitude adjustment: The almost folkloric belief within the housing industry that baby boomers will retire to some spot that’s close to their relatives has gotten the heave-ho, according to the survey. Being close to grandchildren ranked second to last among their decisions about where to live.

5. The houses they’ll live in are changing, too, Dolenga said.

Reflecting what they’ve seen in the economy in the past couple of years, boomer consumers are more accepting of less square footage and are more interested in spaces that can handle multiple uses.

And builders who cater to them have changed tactics somewhat, with less of an “everything is included” approach in order to appeal to financially chastened boomers who are interested in a simpler, less luxurious house to start with and may add some of the fancier features as they go along, she said.

But Dolenga is starting to suspect that despite their loudly expressed financial worries, home-shopping baby boomers just recently have begun to display a little more willingness to crack open their wallets.

“I think we’re seeing some frugality fatigue, people weary of trying to save every single penny,” she said. Her company, which tracks the number of visitors to its developments, says traffic is up.

“We’re starting to see people out there again,” she said. “They’re out there. They’re shopping.”