Existing home sales have soared to the highest pace in three-and-a-half years, inventory has been sparse, and prices have made a monumental comeback, rising 11 percent  in the past year. Yep, it’s officially a seller’s market. While this might make plenty of buyers nervous, it is still possible to score a great home in the midst of a booming market.

Get Pre-Approved

Start by having your mortgage financing completely in place. Don’t waste your time with a pre-qualification; sellers certainly won’t. When there are multiple bids coming in, sellers will only consider those who already have a pre-approval letter in hand. Pre-approval means choosing a lender and getting cleared for funding based on a thorough check of your credit, income and assets.

Compensate for Your Weakness

Competing in a seller’s market is tough, especially when you’re going up against investors with cash. Remember that sellers are not necessarily looking just for the best price. You might find success by making the simplest offer, with the least strings (and hassles) attached. Look at your offer from the seller’s perspective to see where your weaknesses lie and then see what you might be able to offer to sweeten the deal.

Find an Experienced Agent

When you find yourself in the midst of a bidding war, you’ll need an agent who is extremely knowledgeable about the area, local prices and other agents. The right agent will be able to give you valuable counsel about how to place your offer and with what stipulations. Referrals are always the best way to find someone trustworthy and experienced.

And keep in mind a recent survey from real estate data firm Trulia found that 18 percent of homeowners regret not having saved up a larger down payment and 16 percent wished they were more financially secure before buying a home. Make sure you have established your home buying priorities before joining in the fray. When it comes to buying in a seller’s market, patience is required to snag the right deal, even though you may have to compete for it when it comes along.

Home prices rose in April, sales increased and inventory expanded. And it all happened at breakneck speed, according to a report from real estate brokerage Redfin, with homes selling at the fastest pace on record.

In April, 35.2 percent of all houses going under contract within 14 days of their initial listing. That’s up from 34.5 percent in March, the previous all-time high. The fastest-selling market was San Jose with 63.3 percent of homes going under contract in two weeks. San Francisco was next with 57.3 percent, followed by Denver with 54.3 percent and Ventura with 51.4 percent. On the other end was Boston, the slowest-selling market with only 3.2 percent of its home selling within 14 days.

Mortgage finance company Freddie Mac reported last week that new homes are also selling quickly with the median time-on-market dropping to five months, down dramatically from the Recession peak of 14 months and almost back to pre-mortgage meltdown historical averages.

Tight inventory continues to create bidding wars among sellers, forcing prices up and moving homes out quickly. Total housing inventory is down 26 percent from April 2012, with certain parts of the West being most heavily affected. Still inventory posted a monthly gain of 6.4 percent, the largest gain in three years, a testament to the excitement in the market. As prices rise, fence-sitting homeowners decide conditions are ripe for selling. The California Inland Empire, Denver and San Diego were the only markets of the 19 measured where inventory shrank in April from March.

Home prices, according to Redfin, made an impressive 16 percent jump from the previous year and a 5 percent increase from March, with all 19 cities registering both monthly and yearly price growth. San Francisco saw the greatest price appreciation, increasing 34.5 percent compared to the year before.

Freddie Mac analysts predict that builders will ramp up new home starts by 200,000 in 2014, but until inventory catches up with demand we are likely to see sellers control the market for some time.

Interest rates on long-term U.S. mortgage loans have been near all-time record lows for a few years now, but they are predicted to start rising during the second half of 2013. That makes now a crucial period for potential and current homeowners to take advantage of the savings to be had from historically rock-bottom rates. Here’s how:

Beef Up Your Credit

Even though rates are uber-low, mortgage lending standards are still sky high. That means decent credit scores are a must. If yours is in need of improvement, start today by making every possible payment on time. Bringing down balances on credit cards can also help as can disputing any errors you find in your credit report. It takes time for all these changes to affect your score, so start now so that you can qualify for good rates before they rise significantly.

Lock in a New, Low Rate

Refinancing is one of the best ways to take advantage of today’s rates. If you can qualify, a refinance loan can save you plenty of money each month in payments and thousands over the course of your loan. You might also opt for a shorter loan term in order to pay down your mortgage at history’s lowest rates. Switching from a 30-year conventional mortgage to a 15-year loan might not change your monthly payment much, but it will have a huge impact on your total interest costs. If you have any desire to refinance your loan, there will never be a better time than now.

Buy Now

Buyers who have been sitting on the fence may soon be kicking themselves for not jumping into the housing market sooner as rates start to rise. There are certainly some markets where inventory is so low that bidding wars are the norm again, but by historical standards prices are still low and the interest rates savings are incredible. It’s time to find a property and take the plunge.

Shop and Compare

And whether buying or refinancing, borrowers should do their homework to find the best rates. This includes getting quotes online as well as make phone calls to lenders. Loan requirements may still be stiff, but lenders are still looking for business and making them compete for your business can help you secure the lowest rate and fees.

The savings are ripe now in the mortgage market for those who can buy or refinance, and improving your credit score and shopping around can make a new mortgage even sweeter.

Since the beginning of the mortgage meltdown millions of homeowners have defaulted on their loans and millions more remain underwater, owing more on their mortgages than their homes are worth. Government programs have encouraged lenders to modify home loans for struggling homeowners, yet only a small percentage have taken advantage of these programs.

Many lawmakers have been clamoring for a new tactic to be used by government-controlled mortgage financiers Fannie Mae and Freddie Mac, which guarantee about 90 percent of all new loans today. The Obama Administration as well as dozens of congressmen have asked Fannie and Freddie to grant principal forgiveness modifications, where a portion of the loan balance is written off, elimlinating borrowers’ negative equity and reducing their likelihood of defaulting. To date, the regulator of Fannie and Freddie has vetoed that option, worrying that it would cost the government too much money and would actually encourage homeowners to default in order to take advantage of the program.

A new study from the Congressional Budget Office  (CBO) found that while principal reduction could help save some borrowers from foreclosure, the overall impact on the housing market would be minimal. Of the 10 million homeowners currently underwater on their loans, the CBO estimated that only 200,000 would be eligible for principal write-downs under the government’s Home Affordable Modification Program (HAMP.) The report found that fewer than 60,000 new modifications would in initiated and fewer than 100,000 defaults would be prevented. “The estimated aggregate financial benefit to households would be small,” the CBO wrote. “…[The] expected positive effects on the housing market nationally and on the economy as a whole would be small.”

This report, may make things complicated for North Carolina Representative Mel Watt, who was recently nominated by President Obama to be the next director of the Federal Housing Finance Agency, which oversees Fannie and Freddie. Watt was one of 44 House Democrats who commissioned the CBO study last fall, hoping it would prove the necessity of principal reductions.

Since the financial crisis hit in September 2008, there have been roughly 4.2 million completed foreclosures across the U.S. through February 2013, according to housing data company CoreLogic. That means there are an awful lot of former homeowners out there hoping to buy a home again someday. And the good news for those folks is that mortgage lenders are perfectly willing to lend to borrowers after a foreclosure – as long as they wait long enough, that is.

“The biggest hurdles for borrowers in qualifying for a mortgage after a foreclosure are the credit score and the waiting period,” says Darice Vieira, loan officer with Commerce Mortgage in Visalia, Calif. “Provided the rest of their credit profile is good, it is not much different than an ordinary candidate applying for a mortgage loan.”

So while it’s no fun to be patient, the waiting period goes hand-in-hand with credit repair. After such a major financial trauma like foreclosure, lenders require borrowers to wait between three and seven years to reestablish their credit and prove they can responsibly take on debt again.

Potential buyers with foreclosures in their past will need to wait between four and seven years in order to obtain a conventional mortgage backed by Fannie Mae. Those who can prove they had extenuating circumstances like divorce, job loss or severe injury or illness could get a new mortgage in as little as three years. Borrowers can apply in three years for an FHA loan if they can put a minimum of 3.5 percent down. And after a short sale, borrowers generally have to wait at least two years before their next mortgage.

It is possible to get a mortgage sooner through lenders who do not sell to Fannie Mae but it will be pricey – much higher interest rates and larger down payment requirements.

The best thing for potential homeowners to do during this waiting period is to improve their credit. Making all payments on time and keeping balances low on credit cards will help to repair their FICO scores and prepare them for their next home purchase.

Completed U.S. foreclosures fell significantly in March from the previous year, according to foreclosure data company CoreLogic, yet another positive sign of recovery in the housing market.

There were 55,000 completed foreclosures across the country in March, down 16 percent from March 2012 when there were 66,000.

“For 17 consecutive months, foreclosures have declined year over year across the U.S,” said Anand Nallathambi, president and CEO of CoreLogic in a statement. “Although we still have more than a million homes in some stage of foreclosure, this trend, combined with rising home prices, is another signal of a gradually improving housing market.”

On a monthly basis, however, foreclosures increased 6 percent from February’s 52,000 completed repossessions. And compared with earlier averages, the number of foreclosures is still more than double. CoreLogic reported that between 2000 and 2006 – the years before the mortgage meltdown – the nation averaged only 21,000 each month.

The newest numbers do represent progress from the depths of the financial crisis though.

“In March, completed foreclosures were down 52 percent from the peak in 2010, and almost all of the top 100 major metropolitan areas have declining foreclosure rates,” said Dr. Mark Fleming, chief economist for CoreLogic. “The foreclosure rate nationally is down 23 percent relative to a year ago, signaling continued reduction in the stock of distressed assets.”

Florida topped the list of states for the most completed foreclosures in March with a total of 103,000. California was second with 83,000, followed by Michigan with 70,000. The rest of the top five was rounded out by Texas at 53,000 and Georgia with 48,000. South Dakota has only 81 in March making it the state with the least completed foreclosures.

Overall, there were about 1.1 million U.S. homes in some stage of foreclosure in March, down 23 percent from 1.5 million the year before and down 1.9 percent from February.

Now may be the very best time in history to refinance your mortgage. The reason: rock-bottom, all-time record low interest rates. Since the middle of the Great Recession, the Federal Reserve has aggressively kept rates low in order to boost the economy and those low rates can mean big savings for homeowners. Here are three reasons why now is a great time to refinance a mortgage.

1. Low Interest Rates Mean Lower Monthly Payments

How much you pay each month to the mortgage company is greatly affected by the loan interest rate. Even lowering your rate by one percent by refinancing could reduce your payment by $100 or more each month. That extra money could fund lots of other purchases or investments.

2. Shorten Your Loan and Save Money

Because interest rates are so incredible low right now, refinancing into a shorter loan term is more affordable than ever. By converting your mortgage from a 30-year loan to a 15- or 20- year loan, you may have to make slightly higher payments each month, but the difference is not huge because rates on those shorter loans are even lower. Cutting your loan term can save you tens of thousands of dollars at least over the course of your mortgage.

3. Convert Your ARM Loan Before Interest Rates Rise

For those who got into adjustable rate mortgages (ARMs) during the housing boom, the currently low interest rates are actually really helpful in terms of monthly payment savings. Unfortunately for these borrowers, interest rates are likely to start rising within the year and even if the increase is gradual, rate are probably not going to remain around these historic lows forever. Now is the perfect time to refinance into a fixed rate mortgage (FRM) to lock in such attractive rates.

For those who can qualify, now is an excellent time to take advantage of the lowest rates on record with refinance loans in order to cash in on major mortgage savings.

Interest rates on long-term U.S. mortgage loan dropped again in the latest week, with some finding new all-time lows, according to mortgage finance company Freddie Mac.

During the week ended April 25, 2013, the average rate on a 30-year fixed rate mortgage (FRM) fell to 3.40 percent, excluding fees, down from 3.41 percent the week before and down from 3.88 percent at this time last year. This is the fourth consecutive week of falling rates and the 30-year FRM rate is now back to lows not seen since January of this year.

The 15-year FRM sank to a new record low this week, falling to an average rate of 2.61 percent, down from 2.60 percent the previous week and 2.85 percent the year before. Prior to this week, the record low was 2.63 percent roughly five months ago during the third week of November 2012.

The one-year adjustable rate mortgage (ARM) declined from 2.62 percent, just off from 2.63 percent last week.One year ago, the average rate was 2.74 percent.

Freddie Mac offered little explanation for the continued drop in rates, emphasizing instead the benefits of low rates.

“The housing market is getting a boost with mortgage rates hovering at or near record lows,” said Freddie Mac Vice President and chief economist Frank Nothaft in a statement. “ For instance, existing home sales averaged an annualized pace of 4.94 million over the first three months of this year, the most since the fourth quarter of 2009. More impressively, new home sales topped 424,000 during the first quarter, which was the strongest since the third quarter of 2008. The sales pickup is helping to support house-price gains. For instance, the Federal Housing Finance Agency reported that February marked the thirteenth consecutive month that it has recorded an annual rise in its U.S. house price index, which rose by 7.1 percent in the twelve months through February, the most since May 2006. Even with these gains, this U.S. index is still 13.6 percent below its peak set in April 2007.”

Interest rates are being kept low by the Federal Reserve in order to boost the economy and absent a major change in inflation, the Fed has promised to continue its rate policy for en extended period of time.

A government program to save struggling homeowners from foreclosure  is producing disappointing results, although doing better than private sector modifications, according to a new report  from a federal inspector.

The Home Affordable Modification Program, or HAMP, was designed by the Obama administration to help homeowners hit hard by the mortgage meltdown by lowering their monthly payments. The report from the office of Christy Romero, special inspector general for the Troubled Asset Relief Program, or TARP, found that loans modified early on in the program have disturbingly high redefault rates. Forty-six percent of home loans that were modified with HAMP during the third quarter of 2009 are now defaulting as are 36 percent of those modified in the fourth quarter. Those made during 2010 are doing only little better with a default range of 29 percent to 38 percent.

Currently there are 862,279 homeowners who have received a permanent HAMP mortgage modification, but if borrowers default they are removed from the program. The report found that more than 312,000 participants have flunked out since the beginning of the initiative.

“This is a significant problem,” Romero said as quoted in a Washington Post article. “When homeowners fall out of these modifications, all of a sudden they’re facing huge mortgage payments. If they can’t afford it, they’re going to get foreclosed on.”

The report recommended “that Treasury research and analyze the causes of redefaults, develop an early warning system to try and prevent redefaults, and better help homeowners who have redefaulted.”

As of March 31, HAMP initiatives have cost taxpayers $4.3 billion. Yet the inspector general chided the Treasury for not doing more to help troubled borrowers. The report noted that only 2 percent of TARP funds have been used to modify mortgages, while over 75 percent has been used to bailout financial institutions. Romero’s report said, “Treasury pulled out all the stops for the largest financial institutions, and it must do the same for homeowners.”

Interest rates offered on long-term mortgage loans this week fell to their lowest point in 13 weeks, according to data from mortgage finance company Freddie Mac, as economic news indicated some continued weak spots in the economy.

The average rate on a 30-year fixed rate mortgage was 3.41 percent, excluding fees, uring the week ended April 18, down from 3.43 percent the previous week and down from 3.90 percent one year ago. The last time the 30-year FRM was below 3.41 percent was the week of January 17 when it fell to 3.38 percent.

Rates on 15-year FRMs also slipped in the latest week, averaging 2.64 percent, down from 2.65 percent and 3.13 percent one year earlier.

“Mortgage rates nudged lower this week as consumer spending showed signs of weakness,” said Freddie Mac vice president and chief economist Frank Nothaft in a statement. “Retail sales contracted for the second time in three months, falling 0.4 percent in March. In addition, the University of Michigan reported their Consumer Sentiment Index dropped 6.3 points in April to settle at 72.3, its lowest level since July. The April reading snapped a streak of three consecutive gains.”

Record low mortgage interest rates have been helping to prop up the U.S. housing market over the past two years. The last time the 30-year FRM rate averaged above 4 percent was over a year ago during the week of March 22, 2012 when the rate was 4.08 percent. And the last time that rate was above 5 percent was a year before that, during the week of February 17, 2011. The Federal Reserve has been keeping rates at rock bottom on purpose to spur economic growth and has committed to holding them there until improving conditions warrant a change.