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What’s New in the World of Mortgage Rates and Credit Scores?

Do you understand the intricacies of mortgage rates, types of loan packages, and loan reduction plans? Rosie Certified Partner Harold Perkins of the Galaxy Lending Group has the scoop on the current status of all things mortgage and mortgage-related.

Mortgage Rates

Harold tells us that as of January 2025, mortgage rates are hovering in the 7% area. There are many different home lending programs; some will have higher rates, while others will have lower rates. When considering whether you should refinance or borrow, here are a few things to consider:

  1. Rates do vary over time. With the current rates of about 7%, Harold looks into his crystal ball ( his experience makes his crystal ball better than mine) and tells us he does not see interest rates dropping back to the 3 to 4% neighborhood anytime soon.
  2. Supply and demand is a fundamental economic concept that needs to play into decision making. Hopeful buyers waiting to purchase or refinance might be doing themselves no favors. When buyers wait, more people will flood the market when rates come down a few points. Flooding the market increases demand and raises prices. So, the savings they thought they were getting by waiting will likely be absorbed into the higher cost of the home.

Whether buying new or waiting to use the equity in the home to remodel, material prices and labor costs continue to increase. Waiting to act can negate any savings that might be had by shaving a point or two off a mortgage rate. Harold suggests securing the property. Then, if rates are lower, you can refinance the home to get that lower rate.

Mortgage Investments

There are a variety of reasons why people use mortgage loan funds. Harold mentions some common uses and projects the funds are used for:

  1. Primary Home- The standard way to use a loan is to purchase a primary residence. New homeowners put down a percentage of the home’s cost and borrow the rest, paying the mortgage back over time (typically 30 years).
  2. Second Home- Homeowners can use a mortgage loan to purchase a second home for personal use or as an income-producing asset. This usually requires a higher percentage down payment, and the term or length of time the loan lasts might be shorter. Harold suggests talking with a reputable lender to negotiate the mortgage conditions.
  3. Refinancing- Refinancing is often used to take advantage of a lower interest rate, reduce the term of loans, or tap into the equity a homeowner has built up. Those who refinance can use the money for anything they like, from a remodeling project to a world-class vacation.

For most people, their primary home is their biggest asset. Knowing the different ways to put that asset to work can help a homeowner achieve some of their goals.

Credit Score

People who are serious about buying a home will need to have a qualifying credit score. Credit scores are readily available on your personal credit card and bank portals.

In the past, consumers were discouraged from looking up their credit scores as it would affect their scores. The awareness of credit scores has worked to the advantage of buyers as it is at the top of their minds. The average credit score in the US is 717.

*Note- Did you know that credit scores vary? Credit scores are generated by Experian, Equifax, and Transunion, but the scores differ depending on what you are purchasing. Auto, mortgage or appliances may all pull different scores.

Other developments in credit card scores:

  1. First time buyers used to be considered high risk. But research shows that first time buyers rarely default on loans and are considered a positive risk factor.
  2. No-credit-score buyers- The system that monitors scores initially only scored people who carried traditional credit. The systems have been updated, and scores can now be calculated for those potential home buyers who don’t carry a debt burden.

We asked Harold if there are loan types that might benefit our readers and listeners.

Harold says there is a loan mechanism that is not for everyone but can be a life changer for those who qualify. The loan is often branded as the All-in-One Loan.

There is a significant advantage to using this loan. Harold tells us people who purchase this loan can pay off their mortgage significantly earlier than a typical 30-year term. Reducing that mortgage to a 7-year term is possible.

And it is not a new type of loan- it has been around since 2005. Though pay off for this type of loan is significant, there are some drawbacks.

  1. High interest rates- The interest rate of the All-in-One Mortgage is higher than a standard loan.
  2. Tough to Qualify -The loan is harder to qualify for. The homeowners who qualify generally have disposable income.
  3. Self-discipline is required- This loan pays down the principal on the loan and generates funds that act like a line of credit. Access to these funds requires the self-discipline of allowing the available funds to accumulate. *If the funds are misused, it is possible to owe more, not less at the end of the mortgage! This loan is not for everybody and qualifying for this type of loan can be difficult.

Buying a home is the biggest investment most people make. A trusted mortgage company like Galaxy Lending, will be UpToDate on credit scores, mortgage rates and loan types. And they will be happy to educate their customers to make the best decision. 

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CONTENT PARTNER

Galaxy Lending Group provides home loans and personalized mortgage counseling to Arizona, Oregon, Washington, Colorado, Texas & Minnesota residents looking for a reputable and responsible mortgage lender. With two decades of experience in residential lending, we can find you the right loan, even in today’s economy. Our loan officers and support staff will help you choose the most sensible mortgage with the utmost confidence.

 

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Comments (2)

  • Dave
    February 1, 2025 at 9:10 am Reply

    Your website doesn’t allow me to listen live

    • Romey Romero
      February 4, 2025 at 12:21 pm Reply

      We don’t stream the broadcast live, but all of our radio affiliates do. Click on any of our radio affiliates on this page and click the live stream on their website. Thank you!

      https://rosieonthehouse.com/podcast/

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Comments (2)

  • Dave
    February 1, 2025 at 9:10 am Reply

    Your website doesn’t allow me to listen live

    • Romey Romero
      February 4, 2025 at 12:21 pm Reply

      We don’t stream the broadcast live, but all of our radio affiliates do. Click on any of our radio affiliates on this page and click the live stream on their website. Thank you!

      https://rosieonthehouse.com/podcast/

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