The REO (Real Estate Owned) to Rental Industry is about to explode with an onslought of reposessed homes turning into rental property. Here's the story from CNBC News…

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The long-awaited housing recovery is beginning to blossom, according to industry experts taking a look at recent existing-home sales.

Paul Dales, chief economist at Capital Economics, says "it is clear that a housing recovery is now well underway."

Lawrence Yun, chief economist for the National Association of Realtors (NAR), concurs with Dales' assessment, saying "The pattern of home sales in recent months demonstrates a market in recovery."

The evidence: home sales have been on the rise for the past three months, posting a 5 percent increase in December.

In addition to the 5 percent increase in December, NAR reported a 1.7 percent annual increase in existing-home sales in 2011, a total of 4.26 million homes for the year.

Housing inventory is on the decline and fell to its lowest level since March 2005 last month, according to NAR. Approximately 2.3 million homes are available for sale currently.

"The inventory supply suggests many markets will continue to see prices stabilize or grow moderately in the near future," Yun said.

However, listed inventory is only part of the equation, and according to CoreLogic's latest numbers, shadow inventory stands at about 1.6 million.

Regardless, Dales believes sales will rise this year. "Housing still won't contribute much to GDP growth over the next few years, but at least it will no longer subtract from it," Dales says.

All those "record-low" mortgage rates have you watering at the mouth to buy a home or refinance your current one? Mortgage lenders adjust their rates based on perceptions of risk, so unless you can show you're a low-risk borrower, you are unlikely to qualify for a rate that matches those seen in all the advertisements and headlines.

Consumers who want to try for the lowest rates available need to consider these basic factors:

Credit Score: The ideal borrower has a FICO score of 740 or higher. That puts you in the best place for pricing. According to MyFICO.com, borrowers with scores of 760 to 850 could qualify for an annual percentage rate of approximately 3.95 percent on a $500,000 30-year fixed-rate mortgage, while those with scores of 620 to 639 qualify for 5.53 percent.

Points: The lowest rates usually are decreased by paying a fee called a point, or 1 percent of the loan amount. You need to buy points in order to get the best rates at many banks. In Freddie Mac's recent weekly survey on mortgage rates, points have averaged 0.7 percent on loans in the last year. Points might make sense depending on your financial situation and how long you expect to stay in a home. So ask for a zero point quote, too, and compare.

Down Payment: Borrowers who put down at least 25 percent are more likely to obtain "attractive pricing" at most banks. Lenders offer different breaks on rates if equity is higher, so you should ask what is available.

Loan Length: A lot depends on how long you plan to live in a home. If you're likely to move in a few years, an adjustable-rate loan with a low interest rate fixed for, say, three to five years, and adjusted afterward, might work best. Also, rates on 15-year fixed-rate loans are lower than those on the 30-year — 0.77 percentage points, on average, last year.

Property Type: If you're buying a duplex or a four-unit building, your rate will almost certainly be higher. Condominiums may also have a rate premium, especially if they are newer or your down payment is below 25 percent. Lenders charge more if you are not planning to live in the home. Commercial properties like apartment buildings have the highest rates, as they are considered riskier.

Borrowers may also be able to reduce their mortgage rate when they enter into a "lock-in" agreement with a lender. Lenders typically offer a lower rate for a shorter lock period.

Lenders typically agree not to change an offered interest rate for 60 days, but borrowers confident of a quick closing may be willing to accept a 45-day rate guarantee, or even a 30-day lock, in exchange for a small discount, because the transaction's speed helps the lender reduce its risk.

Borrowers must make sure, too, that they consider the entire cost of a home, looking carefully at monthly payment calculations. About a third of homeownership costs are in addition to the mortgage — among them property taxes, insurance, maintenance and repairs.

When buying a home, there are a lot of things to look at to ensure you make the right decision. It is a significant investment on your part as a buyer, so one of the things you need to be aware of is the cost involved in buying the home.

You'll need to consider the down payment. While just a fraction of the selling price, it will still be a significant amount. Your lender will set the down payment they require, depending on the type of loan you're seeking.

If you're financing more than 80 percent of the value of the property, you may need to pay for private mortgage insurance. This is required by lenders as a form of protecting the property. If you do not want this extra cost, you can opt to put down a higher down payment which is usually 20 percent of the selling price to avoid PMI. Aside from saving money on private mortgage insurance, you can also request a better interest rate if you put down more cash up front.

You'll also need to consider loan fees. This is labeled by different names by different lenders but it will usually be a form of payment for the processing of your loan. Be prepared for this as it will always be a part of what you will be paying once you take out a loan with a lender like a bank or any financial institution.

The lender may also require you to have the property inspected before you buy it. Of course, you would need to pay the person or firm that would do the inspection. You should also add other things like the money you would use when going around looking for a property or visiting your real estate agent.

Setting your budget is one of the first things you need to do when buying a house, so use these tips as a guideline for getting started.

While year-over-year home price measurements notched down in 2011, prices are expected to see a slight uptick in 2012, according to Clear Capital.

Should the valuation company's predictions ring true, it would be the first time since 2006 that the change in annual home prices has landed in positive territory.

In 2012, Clear Capital is forecasting U.S. home prices to show continued stabilization with a slight gain of 0.2 percent across all markets. That would put national home prices near levels not seen since 2001.

Clear Capital's report shows U.S. prices declined 0.4 percent in December on a quarter-over-quarter basis as markets gave back some of the gains of the summer buying season.

December's quarterly assessment is the first cooling off after six monthly reports from Clear Capital showed minimal quarterly gains. In fact, the company says the most recent six months of the year saw national home prices flat, posting a decline of just 0.1 percent over the second half of 2011.

The 2.1 percent price decline over 2011 marked the smallest year-end change in either direction since the market gained 1.7 percent in 2006.

Clear Capital expects 2012 to play out much like the last half of 2011, with only a very subtle price change at the national level. A minimal decline in the beginning of the year is expected to turn into a meager gain by year's end.

Half of the 50 major metro markets included in Clear Capital's study are expected to post gains for the year, with individual metros experiencing the full gamut of price movement, from double-digit growth to double-digit drops.