This Newsweek article is a great summary of some post-election options for mortgage relief.

Of course, having both a president and a president-elect (as well as an outgoing and an incoming Congress), might further complicate a bailout.

With all the media attention on the so-called credit crunch, it sounds like there are no mortgages available unless you have perfect credit, a 20% down-payment, and helped a little old lady across the street this morning. Not so – FHA to the rescue!

The Federal Housing Administration is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934.  FHA loans had fallen out of favor over the past few years as people chose sub-prime mortgages with low teaser rates and little documentation, but currently one out of every five mortgages is FHA insured.

Do you need 20% down?  The great news is that FHA only requires 3 percent down. 3 percent!  And that 3 percent can come in the form of a gift or grant.  FHA borrowers only need to have $500 in a transaction.  All the while, FHA mortgage rates are as good or better than their conventional counterparts.

Low or no down payment, extremely competitive rates and easier qualifying, no wonder FHA is moving up the charts!

Today’s market plays to the advantage of buyers, who should be swooping in to make the most of reduced housing costs and favorable interest rates. Many are sitting by and waiting for the market to turn around. But when the market turns, today’s bargains will be yesterday’s missed opportunities.

While home prices may drop further, it is likely that these decreased prices will be accompanied by increased financing costs due to rate cuts by the Fed. This may be counterintuitive, but cuts in the rates that the Fed loans money to banks can result in higher interest rates on mortgages. This means that any money saved on paying less for a house in a few months time will be offset by your having to pay off their mortgage at a higher interest rate making “playing the waiting game” a waste of time (and very little fun).

This rate increase isn’t just speculation. Just a couple of weeks ago, in early February, the fixed mortgage rate jumped a full half-percent, making it the fastest rate increase in 20 years.

The following scenarios demonstrate how even as home prices may drop, monthly mortgage payments basically stay the same due to increased interest rates: Prices decrease by 5% and interest rates increase by 0.5%. A home priced at $218,900 with a 6.04% interest rate will see a monthly mortgage payment of $1,054. If there is a price drop of 5% to $207,955 and an increase in the interest rates to 6.54%, the monthly payment will be $1,056. Consider a 10% price drop to $197,010 and an interest rate increase to 7.04% the payment will be $1,053.

We currently have a large inventory of prices and sellers motivated to sell with historically low interest rates that seem to be rising quickly. Many of my current clients kick themselves for not purchasing in 2002 or earlier. I just hope the kicking won’t continue because they waited out the market again.