As the economy has recovered over the past two years, low price home sales (under $95,000) were the name of the game.  Investors abounded, snatching up these properties while they could, and fueling the recovery process.

In short, the investors did their job; but is it time for home buyers to take over?

According to the Real Estate Economy Watch, the discount priced homes were able to attract enough buyers to drive prices up a full 31.8% from 2011 - an impressive feat.  

Over this time, we worked with many frustrated home buyers who found themselves losing multi-offer situations to all-cash investors, developers, and rehabbers. As the investors competed with one another and conventional home buyers, supply shrank and prices climbed. 

While low tier home price gains were at 3.7% a year ago, they have now slowed to 1.2%.  This stabilization could be a trigger for first time and move-up homebuyers to engage in the market once more.

30-year fixed mortgages in 2012 were historically low.  Freddie Mac believes it is unlikely for them to return to recent lows.

If rates were to head back under 4%, that would, of course, be fantastic news for any prospective home buyer (or home owner who put off re-financing their current mortgage.)  

Unfortunately, mortgage interest rates are expected to rise this year, as we have recently written about.  

It is likely, in fact, that rates will look more like the greater than 6% rate of last decade rather than the less than 3.5% rate in 2012.

Note, however, that the current low is extremely low compared to historic averages, according to Freddie Mac:

The all-time record low – since Freddie Mac began tracking mortgage rates in 1971 – was 3.31% in November 2012. Conversely, the all-time record high occurred in October of 1981, hitting 18.63%. That's more than four times higher than today's average 30-year fixed rate of 4.32% as of March 20...rates hovering around 4.5% may be high relative to last year, but something to celebrate compared to almost any year since 1971.

Being unable to make monthly mortgage payments can be a scary position to be in, with foreclosure looming right around the corner.  There are more than a few options to consider before that point, however.  Here are some suggestions inspired by one of our favorite sites, Lifehacker.

Disclaimer: We are not attorneys, mortgage lenders, or financial advisors, but we recommend you reach out to a qualified professional. Here are some we've worked with before.

Refinance or Modify Your Existing Loan

A good first step to take in this situation is to look into modifying your current loan or take on a new loan to replace your current one (refinancing).  This option will not be a possibility for every homeowner, nor will it always be an easy process, but it is a good place to start.

Contact your loan servicer or a mortgage lender as soon as it begins looking like you can't make your monthly mortgage payments, as the longer you wait, the fewer options you will have.

Here are the most likely options a loan modification or refinance will have:

Reduce Your Interest Rate

Refinancing your interest rate is step that can easily cut back on your monthly mortgage payments.  In fact, refinancing by even 1% can save you as much as $2,000 a year, according to Yahoo Homes.

Locking in a low rate may include switching from a variable to a fixed interest rate.

Closing costs and lender fees can be a big deterrent for this procedure.  Thankfully, we have a great relationships with several lenders here in Chicago - who can greatly reduce these costs.  Here's how to contact them.

Extend Your Loan Term

Wikipedia CommonsThings are looking up for the 2014 housing market, based on our own anecdotal evidence, the daily news, and the KCM blog.  Why can we expect the trend to continue?  

Here are 3 interesting points from KCM blog and David Berson, chief economist at Nationwide.

1. 2014 should be the strongest housing year since the Great Recession

Most economists expect the job market to continue improving in 2014, which will expedite the housing market in a positive manor.  Despite the rising interest rates we've previously mentioned, the housing market should still thrive.  Mr. Benson states the following:

Most economists expect an improved job market in 2014, with employment growth accelerating and the unemployment rate continuing to decline.  That jobless rate drop will reflect more of a pickup in employment than further declines in the labor force participation rate. This will be the key factor improving housing demand this year, even if mortgage rates rise and affordability declines. While the housing market tends to do especially well when the job market improves and mortgage rates decline simultaneously, that combination of events occurs only rarely…People buy homes when their job and income prospects improve – even if it’s more expensive to do so – rather than buy when it is inexpensive to do so but they’re worried about keeping their jobs.

2. Demographics are expected to start favoring housing activity

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