We have some stating that inflation may be hitting sooner than expected.  This would mean higher mortgage rates.  Although nobody knows where the bottom of the rate will / have hit, their is no question that mortgage rates are at near all time lows and home owners and home buyers should take advantage of these.  Home affordability is very high.  It is better to buy than to rent.

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Inflation, not deflation, Mr. Bernanke Caixin Online

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Closing Costs Soar.

Aug 19, 2010

Consumer protection regulations and more stringent underwriting have driven the average closing costs on loans up by 36.6% according to a recent survey.    The average closing costs on a $200,000 loan rose to $3,741, which represents a 36.6% increase from a year ago.  This is another example of things designed to help the consumer have an opposite outcome.

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According to TransUnion in a report issued Tuesday, mortgage delinquencies fell during the 2nd quarter of 2010.  This was the second period in a row since 2006 that the number of home owners 60 days  delinquent  on their mortgages had declined.  Also 90 and 120 day mortgage delinquencies also slowed.    This is a sign that the housing and credit markets are stabilizing.

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Thinking about buying a home?  Maybe you should act now.  Proposed  and slated changes to FHA loans will mean it will be tougher and more expensiveto buy a home.  Read this article from MarketWatch:

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Homebuyers beware: Tougher rules for FHA loans – MarketWatch.

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www.paulcantor..info

Inquire about qualifying for an FHA Mortgage

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Yes many home owners who owe more on their homes than the value of their homes are able to refinance at today’s low mortgage rates.  FHA streamline refinances are available without requiring an appraisal and without documenting income (employment is verified).  Also Fannie Mae is allowing many of the loans it holds to refinance without a new appraisal through the Fannie Mae Refi Plus program.

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Go ahead check into it while rates remain low.

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www.paulcantor.info

e-mail Paul

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The Fed last week at its FOMC meeting came as close as it likely can in assessing the near future for the US economy as declining; “The pace of economic recovery is likely to be more modest in the near term than had been anticipated”. The Fed can’t outwardly get much more negative without a self-fulfilling prophesy; the statement ratified what was becoming increasingly obvious even to the bulls that staunchly resisted reality. At the meeting the Fed, increasingly concerned that the economy is teetering, initiated another quantative easing move when the FOMC said the Fed would continue buying treasuries, using pay downs on the $1.25T of MBSs it holds from last year. A clear sign the Fed “hopes” lower rates will help—-pushing on a string however, low rates alone will not stop the economic slide. The wake-up call should be obvious; until consumers are confident their jobs are secure and the housing sector improves lower rates won’t do the job.

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This week brings us the release of four reports that may influence mortgage rates, but only one of them is considered to be highly important. With no relevant auctions or speeches on tap, I suspect we will see much less movement in mortgage rates this week compared to the past couple of weeks. There is no relevant data scheduled for release tomorrow, so look for the stock markets to drive bond trading and mortgage rates.

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This Week’ Economic Calendar:

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Tuesday;

8:30 am July housing starts and permits (+1.2% and -2.3% respectively)

July Producer Price Index (+0.2%, ex food and energy +0.1%)

9:15 am  July Industrial Production (+0.6%, +0.1% in June)

July Capital Utilization (74.5% frm 74.1% in June)

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Wednesday;

7:00 am  MBA weekly mortgage applications

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Thursday;

8:30 am  Weekly Jobless Claims ( -9K to 475K)

10:00 am July Leading Economic Indicators (+0.2%)

Aug Philadelphia Fed Business Index (+7.5 frm +5.10)

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Three of the week’s four reports will be posted Tuesday morning. The first is July’s Producer Price Index (PPI) that gives us an indication of inflation at the producer level of the economy. There are two readings in the report- the overall index and the core data reading. The core data is more important because it excludes more volatile food and energy prices that can change significantly from month to month. Current forecasts call for an increase of 0.2% in the overall and a 0.1% increase in the core data reading. A larger increase in the c ore data could push mortgage rates higher Tuesday morning. If it reveals weaker than expected readings, we may see mortgage rates improve as a result.

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The second report of the day is July’s Housing Starts data. This report gives us an indication of housing sector strength and future mortgage credit demand. However, it isn’t considered to be of high importance to the bond market or mortgage pricing and usually doesn’t cause much movement in mortgage rates unless it varies greatly from forecasts. It is the least important of the week’s reports and is expected to show a small increase in construction starts of new homes. The lower the number of starts, the better the news for the bond market, as it would indicate a weaker than expected housing sector.

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July’s Industrial Production is the third. It gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is considered to be moderately important to the markets, but will likely not have much if an impact on mortgage rates due to the importance of the PPI reading. Current forecasts are calling for a 0.6% increase in production.

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The Conference Board will give us its Leading Economic Indicators (LEI) for July late Thursday morning. This index attempts to measure economic activity over the next three to six months and is considered to be moderately important. A higher than expected reading is bad news for the bond market because it indicates that the economy may be strengthening more than thought. However, a weaker than expected reading means that the economy may not grow as much as predicted, making stocks less appealing to investors. This also eases inflation concerns in the bond market and could lead to slightly lower mortgage rates Thursday if the stock markets remain calm. It is expected to show an increase of 0.2 % in the index, indicating minor economic growth over the next couple of months.

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Overall, look for Tuesday to be the busiest day of the week with the PPI being released. The rest of the week will likely be influenced more by stock prices than anything else, which may be quite volatile. Therefore, keep an eye on the markets and maintain contact with your mortgage professional if you have not locked an interest rate yet.

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This video explains why now is a great time to buy investment properties and benefits of holding them in an IRA.

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Freddie Mac announced the results of its quarterly Product Transition Report Thursday.  Two quotes from  Freddie Mac  Chief Economist, Frank Nothaft sum it up:

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“Average interest rates on 30-year and 15-year fixed-rate mortgage loans fell pretty consistently through the latter half of the quarter, hitting 50-year lows in June according to Freddie Mac’s Primary Mortgage Market Survey®. The ability to lock in a principal and interest payment at below 5 percent for 30-years is rare enough. The fact that a 30-year fixed-rate mortgage can be obtained for 4.5 percent or a 15-year mortgage for 4.0 percent is an amazing opportunity for borrowers.”

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“The share of borrowers shortening their amortization terms is at its highest level in six years. In the second quarter of this year, 30 percent of borrowers who originally held a 30-year fixed rate loan refinanced into a 15- or 20-year FRM. If the borrower had a 30-year fixed rate loan at a 6.5 percent interest rate and a $200,000 principal balance, they could refinance and cut their payment by about $250 a month with a new 30-year fixed-rate loan or for about the same monthly payment as their old loan they could save some $70,000 in interest over the life of the loan with the shorter 20-year term loan.”

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www.PaulCantor.info

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The worst is over for the housing market according to a Reuter’s article.  It predicts no double dip for housing prices in major US Markets.   A slight increase in values is predicted.  Don’t get the champagne out, unemployment is high, lenders have tightened up guidelines and there is a lot of supply on the market;  it will take some time before we see soaring prices.

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