I strongly recommend staying at Tunguholt Guesthouse if you are travelling in East Iceland. It is very well located at the end of the fjord near Fáskrúðsfjörður, it is quiet and it is very cheap.
We discovered this place while trying to go to the Berunes Youth Hostel. The hostel was fully booked but the gentlement there was kind enough to recommend us to Tunguholt (he even booked for us!).
The gentleman who welcomed us was very kind and charming. The house and the rooms at Tunguholt are quite large. There is a kitchen with a fridge, oven, etc. if you want to lunch there. There are a lot of parking space beside the house and it is extremely calm. The house is located at the end of the fjord which makes for a magnificient view.
A really great place to stop by between Höfn & Egilsstadir.
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