The recent historic bailout of mortgage giants Fannie Mae and Freddie Mac will likely come as welcome news to many homebuyers and homeowners looking to refinance. Already, interest rates on 30-year fixed mortgages are down as much as three quarters of a point or more from their recent high of around 6.5 percent. As a result, more applicants are entering the home buying pool and those in desperate need of refinancing are finding some relief.

With almost 3 million baby boomers turning 62 this year, they enter into a life transition that has almost become a rite of passage — planning their ideal dream retirement. With that, usually comes planning a physical move toward a new lifestyle, which generally leads to moving to a new home or location. All of this can be an exciting opportunity in terms of the real estate market, both for the early retiree and for the real estate market builders and investors.

Home financing for active retirees is a complicated process, especially in today's financial environment. Generally speaking, fixed rate mortgages, or FRMs, are a better option for retirees who are on a single-source fixed income. The decision to get a 30-year or a 15-year FRM depends entirely on the level of that income. A retiree should not have more than 30-35% of his or her monthly income going towards the mortgage payment, as the "other" costs of living can add up quickly, and funds should be kept available for any increases in medication or hospitalization expenses. The fixed rate mortgage helps to prevent the retiree from any "payment shock" in the future which may lead to a situation where he is unable to continue making payments.