Ask the Expert – Rick Cirelli


An Uptick in Attitudes



Rick Cirelli

For the first time in six months, responses to Fannie Mae’s Monthly National Housing Survey were positive regarding home prices.  Respondents are a mixture of homeowners both with and without mortgages, including renters. Here are the highlights from the November survey:

·         22 percent expect home prices to appreciate over the next

·         0.2 percent is the anticipated home price increase over the next year (not a lot but at least its positive)

·         19 percent expect prices to decline, down from 23 percent last month

·         53 percent expect prices to remain the same

·         68 percent view this as a good time to buy a home

·         41 percent expect rents to increase

·         6 percent expect rents to decline

My conclusion: If home prices and rents are expected to rise, now is a good time to buy.


Update on HARP2: Home Affordable Refinance Program

Details have been coming out about the long-awaited Home Affordable Refinance Program that allows underwater borrowers to refinance their home regardless of how deep underwater they are. The previous version limited the loan amount to 125 percent of the current value of the home, but lenders would not lend above 105 percent.

Under the new version, there are no restrictions on the current value of the home but; neither Fannie Mae nor Freddie Mac will have their automated underwriting programs changed until March 31. Until then, lenders are sticking to the 105 percent limit.

Fannie and Freddie have also lessened the rate or pricing adjustments for loans that are refinanced under this program making it more attractive than the earlier version.

Other details:

·         Payments on the existing loan must be current with no delinquencies in the past six months and no more than one delinquent payment in the past 12 months

·         The existing loan must have been originated prior to May 31, 2009 (they should have dropped this requirement in my opinion)

·         The existing loan must now be owned by Fannie Mae or Freddie Mac, regardless of the lender that services the loan. Looking it up is easy. Here are the links: and

My advice:

·         If you are underwater and refinancing between 80 percent and 105 percent of the property value: do it now

·         If you need more than 105 percent, wait until March 31.


Rates Are at an All-Time Low – Again

Last Friday the government announced that the nation’s unemployment rate in November slipped to 8.6 percent from 9.0 percent. At first blush it appeared that stocks would rally and mortgage rates would rise. But, after dissecting the data, it was realized that the drop was due largely to a 315,000 decrease in those actually looking for jobs rather than an increase in the number of people hired. Out of the 120,000 new jobs created, 49,800 came from retail, and the majority of those came at clothing stores. Therefore, the gain is unlikely to hold up once the holiday season passes.

The other factor weighing in on mortgage rates is the progress (or lack thereof) with the European debt crisis. If and when it gets resolved, mortgage rates will rise a little. For a while, the markets were overreacting to any tidbit of news. Now the market seems to have factored in a long, slow resolution or perhaps no resolution at all in the short run.