On Thursday, the Senate agreed to continue the popular home buyer tax credit and offer a new tax break to homeowners who want to move up to middle-market homes.

The tax credit for first-time home buyers, which was scheduled to expire at the end of November, is considered by economists to be a major contributor to the increase of nationwide home sales. Under the bill, both first-time and existing homeowners would be able to take advantage of the expanded program through April 30, and close by June 30, 2010.

The government-backed program would continue granting an $8,000 tax credit to first-time home buyers and would provide a new $6,500  credit to property owners looking to move up to middle-market homes (with a purchase limit of $800,000) who have lived in their home for at least five consecutive years out of the last eight.

The first-time home buyer tax credit, along with record low mortgage rates and reduced home prices, has led to a rush by qualified buyers to close purchases before the November expiration.

Economists from the National Association of REALTORS®, which has strongly favored the extension, estimate that the current tax credit has contributed approximately $22 billion to the general economy, and approximately 2 million people will take advantage of the tax credit this year.

In addition to the tax credit extension, some states offer additional financial incentives for first-time home buyers. For a full list of state-by-state rates, please visit www.lendingtree.com/mortgage-loans/rates/.

President Obama is expected to sign the tax credit extension into law on Friday, November 6, in an effort to stabilize the battered housing market, stimulate the economy and create jobs.