This Week opens with more pressure on the rate markets. The end of the drive to continual lower rates appears finished, though we still do not expect mortgage interest rates to increase a lot. Mortgage rates did not fall nearly as much as treasury rates as investors stampeded to safety on worries the economy would fall back into recession, so it is unlikely mortgage rates will ratchet up in lock step with treasury rates. The 10 yr note yield has increased 40 basis points in rate over the last three weeks while mortgage rates although higher now, have not increased much.

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This week has a full plate of economic data; the first round of a lot of key August data. Retail sales, four reports on the manufacturing and business sector, both PPI and CPI for August and Congress back in play. We expect market volatility will continue driven by uncertainty that still hangs over the economic outlook and elections coming up. The 10 yr note is approaching oversold short term readings, given any weaker data we would expect the note and mortgage prices will increase but the wider perspective now is negative for rates. Use any improvement in mortgage prices to lock in clients that have been floating looking for better rates. Keep a closer look on the rate markets this week

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Date Time (ET) Statistic For Market Expects Prior
09/13/10 02:00:00 PM Treasury Budget Aug -$95.0B -$103.6B
09/14/10 08:30:00 AM Retail Sales Aug 0.30% 0.40%
09/14/10 08:30:00 AM Retail Sales ex-auto Aug 0.30% 0.20%
09/14/10 10:00:00 AM Business Inventories Jul 0.70% 0.30%
09/15/10 08:30:00 AM NY Fed – Empire Manufacturing Survey Sep 6.4 7.1
09/15/10 09:15:00 AM Industrial Production Aug 0.30% 1.00%
09/15/10 09:15:00 AM Capacity Utilization Aug 75 74.80%
09/15/10 10:30:00 AM Crude Inventories 09/11/10 NA -1.85M
09/16/10 08:30:00 AM Initial Claims 09/11/10 460K 451K
09/16/10 08:30:00 AM Continuing Claims 09/04/10 4450K 4478K
09/16/10 08:30:00 AM PPI Aug 0.30% 0.20%
09/16/10 08:30:00 AM Core PPI Aug 0.10% 0.30%
09/16/10 10:00:00 AM Philadelphia Fed Sep 2 -7.7
09/17/10 08:30:00 AM CPI Aug 0.20% 0.30%
09/17/10 08:30:00 AM Core CPI Aug 0.10% 0.10%
09/17/10 09:55:00 AM Mich Sentiment Sep 70 68.9

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August’s Retail Sales report will be posted early Tuesday morning. It will give us a very important measurement of consumer spending, which is extremely relevant to the markets because it makes up two-thirds of the U.S. economy. Current forecasts are calling for a 0.3% increase in sales. Analysts are also calling for a 0.3% rise in sales if more volatile auto sales are excluded. Larger th an expected increases would be considered bad news for bonds and likely lead to an increase in mortgage pricing since it would indicate economic growth.

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Wednesday’s Industrial Production report 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 but could help change mortgage rates if there is a significant difference between forecasts and the actual reading. Analysts are expecting to see a 0.3% increase in production. A higher level of output could lead to higher mortgage rates, while a weaker than expected figure would hint at a soft manufacturing sector and would be considered good news for bonds and mortgage rates.

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One of the week’s two important inflation readings will posted by the Labor Department early Thursday morning. This is August’s Producer Price Index (PPI), which gives us an important measurement of infla tionary pressures at the producer level of the economy. There are two readings that analysts follow in this release. They are the overall index and the core data reading. The core data is the more important of the two since it excludes more volatile food and energy prices. Analysts are predicting a 0.3% increase in the overall index, and a rise of 0.1% in the core data. Stronger than expected readings could fuel inflation concerns in the bond market. That would be bad news for bonds and mortgage rates because inflation is the number one nemesis of the bond market as it erodes the value of a bond’s future fixed interest payments. As inflation becomes more of a concern in the markets, bonds become less appealing to investors, leading to falling prices and higher mortgage rates.

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Friday has two reports scheduled, but one is much more important than the other. The first is August’s Consumer Price Index (CPI) during early morning hours. The CPI is one of the most imp ortant reports we see each month. It is considered to be a key indicator of inflation at the consumer level of the economy. As with its’ sister PPI report, there are two readings in the report- the overall index and the core data reading. Current forecasts show a 0.2% increase in the overall reading and a 0.1% rise in the core data reading. As with the PPI, a larger increase in the core data would likely lead to higher mortgage rates.

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The second report of the day and last of the week will be posted by the University of Michigan during late morning trading. Their Index of Consumer Sentiment will give us an indication of consumer confidence, which hints at consumers’ willingness to spend. If confidence is rising, consumers are more apt to make large purchases. But, if they are growing more concerned of their personal financial situations, they probably will delay making that large purchase. This influences future consumer spending data and can im pact the financial markets. It is expected to show a reading of 70.0, which would mean confidence rose from August’s level. That would be considered bad news for bonds and mortgage rates, but the CPI is much more important to the markets than this data is. Therefore, expect to see the CPI results drive the markets and mortgage pricing much more than this data.

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Tuesday and Friday may have the biggest rate swings week with the Retail Sales and CPI reports being released respectively. However, Thursday’s PPI release is also extremely important to the markets, so it cannot be ignored either. Tomorrow will probably end up being the calmest day for mortgage rates, but we still may see minor changes if the stock markets show much movement. Maintain fairly constant contact with your mortgage professional if still floating an interest rate.

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Jobless numbers and retail sales dominate the news for the upcoming week.  Also congress is back in session, primaries in several states.  News from Kraft, RIM (the maker of Blackberry),  and more.  All this will have an impact on mortgage rates.



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This week brings is a quite week for the economic calendar, However; two Treasury auctions that may play a role in this week’s mortgage pricing.

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Date Time (ET) Statistic For Market Expects Prior
09/08/10 10:30:00 AM Crude Inventories 09/04/10 NA 3.42M
09/08/10 02:00:00 PM Fed’s Beige Book Sep NA NA
09/08/10 03:00:00 PM Consumer Credit Jul -$5.25B -$1.3B
09/09/10 08:30:00 AM Initial Claims 09/04/10 470K 472K
09/09/10 08:30:00 AM Continuing Claims 08/28/10 4445K 4456K
09/09/10 08:30:00 AM Trade Balance Jul -$47.3B -$49.9B
09/10/10 10:00:00 AM Wholesale Inventories Jul 0.40% 0.10%

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Wednesday afternoon. The Federal Reserve will release its Beige Book report at 2:00 PM ET Wednesday. This report details current economic conditions in the U.S. by Federal Reserve regions. It is believed to be a key source of data when the Fed meets for their FOMC meetings and is usually released approximately two weeks prior to each meeting. If it reveals any significant surprises, we may see movement in the markets and mortgage pricing as analysts adjust their theories on the Fed’s next move. Most likely thou gh, it will be a non-event and will not lead to a noticeable change in mortgage rates.
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Also Wednesday is a 10-year Treasury Note auction, which will be followed by a 30-year Bond auction Thursday. It is fairly common to see some weakness in bonds before these sales as investors prepare for them. If the sales are met with a decent demand from investors, indicating interest in longer-term securities such as mortgage-related bonds still exists, the earlier losses are usually recovered after the results are announced. The results of the sales will be posted at 1:00 PM ET each day. If demand was strong, particularly from international investors, we should see mortgage rates improve during afternoon trading Wednesday and Thursday.
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July’s Goods and Services Trade Balance data will be posted early Thursday morning, giving us the size of the U.S. trade deficit. It is expected to show a deficit of approximately $47.2 billion, which would be a decline from June’s $49.9 billion. However, I would consider this the least important of this week’s events, meaning it will likely have little impact on bond trading or mortgage rates unless it varies greatly from forecasts.
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Overall, this week looks like it will be much less active for mortgage rates than last week.

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After the post tax credit months of dropping home sales, the National Association of Realtors announced a modest increase in pending sales of existing homes in July.

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Low mortgage rates and lower home prices  have  made buying a home  extremely affordable.

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Credit Geeks.

Aug 31, 2010

I do a lot of seminars and counseling my clients on credit scores. But these people need a life, take a look at this video:

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Mortgage Rate Update.

Aug 30, 2010

Mortgage rates ended the week a little higher last week.  Last week mortgage bond prices were fairly volatile.

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Date Time (ET) Statistic For Market Expects Prior
30-Aug 8:30 AM Personal Income Jul 0.20% 0.00%
30-Aug 8:30 AM Personal Spending Jul 0.30% 0.00%
30-Aug 8:30 AM PCE Prices – Core Jul 0.10% 0.00%
31-Aug 9:00 AM Case-Shiller 20-city Index Jun 3.10% 4.61%
31-Aug 9:45 AM Chicago PMI Aug 57 62.3
31-Aug 10:00 AM Consumer Confidence Aug 50 50.4
31-Aug 2:00 PM Minutes of FOMC Meeting 10-Aug
1-Sep 8:15 AM ADP Employment Change Aug 13K 42K
1-Sep 10:00 AM Construction Spending Jul -0.70% 0.10%
1-Sep 10:00 AM ISM Index Aug 52.9 55.5
1-Sep 10:30 AM Crude Inventories 28-Aug NA 4.11M
1-Sep 2:00 PM Auto Sales Aug 3.9M 3.8M
1-Sep 2:00 PM Truck Sales Aug 5.1M 5.14M
2-Sep 8:30 AM Initial Claims 28-Aug 475K 473K
2-Sep 8:30 AM Continuing Claims 21-Aug 4435K 4456K
2-Sep 8:30 AM Productivity-Rev. Q2 -1.70% -0.90%
2-Sep 8:30 AM Unit Labor Costs Q2 1.10% 0.20%
2-Sep 10:00 AM Factory Orders Jul 0.30% -1.20%
2-Sep 10:00 AM Pending Home Sales Jul 0.00% -2.60%
3-Sep 8:30 AM Nonfarm Payrolls Aug -120K -131K
3-Sep 8:30 AM Nonfarm Payrolls – Private Aug 44K 71K
3-Sep 8:30 AM Unemployment Rate Aug 9.60% 9.50%
3-Sep 8:30 AM Hourly Earnings Aug 0.10% 0.20%
3-Sep 8:30 AM Average Workweek Aug 34.2 34.2
3-Sep 10:00 AM ISM Services Aug 53 54.3

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The Conference Board will post their Consumer Confidence Index (CCI) for August late Tuesday morning. This index measures consumer sentiment about their personal financial situations, giving us a measurement of consumer willingness to spend. That is important because consumer spending makes up two thirds of the U.S. economy. A decline in confidence would indicate that surveyed consumers probably will not make a large purchase in the immediate future. That sign of economic weakness should drive bond prices higher, leading to lower mortgage rates Tuesday. It is expected to show a reading of 50.0, which would be a small decline from July’s 50.4. The lower the reading, the better the news for bonds and mortgage pricing.
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Also Tuesday is the release of the minutes from the last FOMC meeting. There is a pretty good possibility of the markets reacting to them following their 2:00 PM ET release, especially if they show some divisiveness by its members. It will be interesting to see some of the Fed member’s views on the economy and inflation and if they will hint what the Fed’s next move may be. But this is one of those events that can cause significant mo vement in rates after its release or be a non-factor. I suspect that this particular release will cause a little movement in bond prices, but not enough to significantly affect mortgage pricing.
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Wednesday’s only important news is the release of the Institute for Supply Management’s (ISM) manufacturing index at 10:00 AM ET. This index measures manufacturer sentiment and is expected to show 53.0, which would be a decline from last month’s reading of 55.5. A reading above 50 means that more surveyed manufacturers felt business improved during the month than those who felt it worsened. A larger than expected decline in the index would likely cause selling in the stock markets and lead to an improvement in mortgage rates Wednesday.
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There are two reports scheduled for Thursday. The first is the revised 2nd Quarter Productivity numbers, which measures employee productivity in the workplace. Strong levels of productivity allow the economy to expand without in flation concerns. It is expected to show a downward change from the previous estimate of a 0.9% decline. Forecasts are currently calling for a 1.6% drop, meaning productivity was weaker than previously thought. This would be negative news for the bond market and mortgage rates.

July’s Factory Orders data will also be released Thursday morning. This report measures manufacturing sector strength and is similar to last week’s Durable Goods Orders, but includes orders for both durable and non-durable goods. It is expected to show a 0.3% increase in new orders. A smaller than expected rise would be favorable for bonds, but I don’t see this data causing much movement in rates unless its results vary greatly from forecasts.
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The biggest news of the week comes Friday morning. The Labor Department will post the unemployment rate, number of new jobs added or lost and average hourly earnings for August early Friday morning. The ideal scenario f or the bond market and mortgage rates is rising unemployment, a larger than expected drop in payrolls and earnings to remain unchanged. Analysts are expecting to see that the unemployment rate moved from 9.5% to 9.6% and that 118,000 jobs were lost during the month. Weaker then expected readings would be very good news for bonds and lead to lower mortgage rates Friday. However, if we get stronger than expected numbers, mortgage rates will probably spike higher Friday.
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Overall, I expect to see the most movement in rates Friday, but Tuesday and Wednesday should also be fairly active. Also worth mentioning though is the fact that next Monday is Labor Day so all markets will be closed. The bond market will not close early this Friday, but many traders may head home for the long weekend after Friday’s data is posted. This means that trading will likely be thin Friday afternoon even though the markets will still be open. This could lead to additional volatility in rates as traders prepare for the long weekend, so please be careful this week if still floating an interest rate.

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www.paulcantor.info

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Not that long ago, the credit score was a mysterious number. Whether you were shopping for a car, a house, or a credit card, you could be told your score was too low, and you would not be able to get any financing. Alter­nately, the paperwork might be presented to you and all you had to do was sign. Rarely would you be told your actual score. As time has gone on, and laws have been passed, consumers now know not only what their credit score is, but also what factors are used to create credit scores. Unfortunately, the term “credit score” is used for any model that creates a number indicating your creditworthiness.
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The major reporting bureaus has developed their own scores, Vantage Score®.  It is not uncommon for someone to get a credit score online, or from an auto dealer, or somewhere else, and then be shocked when they begin the mortgage buying process because their “credit score” varied significantly from what they thought it was..

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The home mortgage industry continues to primarily use the classic FICO® score as the basis of evaluating creditworthiness. Whether you are currently in the market for a mortgage or may be in the future, one of the most important factors is your credit score. Please give me a call at (804) 433-1510 with any questions about your credit, and how we can get the best financing available for you.

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Reducing Debt

Aug 25, 2010

Reducing Debt – There is no quick fix, requires careful planning and implementation.
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Develop a Debt Reduction Plan of Action:

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The best way to approach debt reduction is by re-examining your spending habits and the way your monthly cash flow works. This doesn’t necessarily mean that you need to spend less or earn more. It just means that you need to spend your monthly cash flow differently. You see, most people who want to become debt-free, can become debt free if they just manage their cash flow differently.

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For example, instead of being forced to dip into your credit cards every time you have an unexpected bill, you should establish a financial reserve account specifically to prepare yourself for unexpected financial obligations. CMPS professionals help you establish a viable plan to re-allocate your monthly cash flow and change your spending habits. This cash flow plan will result in your being financially able to pay cash for everything such as home improvements, cars, furniture, vacations, children’s education and other living expenses.

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Implement the Plan of Action:

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There is a reason that professional athletes have coaches. No matter how good the athlete is, the coach can help keep them accountable in identifying weak spots and improving their performance. You can also benefit by having a team of “financial coaches”. CMPS professionals are able to “coach” you in implementing your debt reduction plan. CMPS professionals also work in a team environment with CPAs, CFPs, attorneys and other financial professionals in order to help you better achieve your goals in life.

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Review and Modify the Plan of Action:

We all experience changes in our lives that involve our income, career, family, health, lifestyle, etc. CMPS professionals help you review and make modifications to your debt reduction plan as changes arise in your personal and financial situation. Additionally, there may be new types of mortgage planning products and services that could help you enhance your debt reduction plan. The plan review and modification is often referred to as an “Equity Management Review”, or an “Annual Mortgage Review.

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Contact Paul about a debt review.

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www.paulcantor.info

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On the heels of the disappointing existing home sales numbers yesterday, sales of new homes reach new low last month.  Other data pointing to a no-recovery is the orders for durable goods lower than anticipated.
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The National Association of Realtors released exsisting home sales numbers today and they dropped to 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July.    This is the lowest level since May of 1995.

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