Marry the House, Date the Rate

Are we here again?

So you’ve found your dream house, but the rates have gone up again.

For some real estate agents, their go to response is “marry the house and date the rate.”

But is that always wise?

Let’s Figure This Out

Interest rates have been hovering around 7% for a while, freaking out buyers who have only known the rates under 5% and sometimes closer to 2%. The rise in appreciation and interest rates have kept those buyers out of the market. Some agents are telling their clients they should buy their dream home since they can refinance down the road. This could be true if interest rates decrease enough to make the cost of the refi worthwhile.

So, let’s say you’ll pay 3.5% to refi your mortgage of $500K. That’s a fee of approximately $17,000 to decrease your monthly payment by about $420. A substantial decrease, to be sure, but you won’t make up the refi fee for 3.5 years. Be sure you won’t need to sell before that.

Things to Consider

"Homes always appreciate."

Not always especially after a recession. A recession can still happen!

"You will always be able to refinance!"

Will you, though? Unexpected financial changes have forced homeowners to sell their home.

"Don't worry, rates will go down!"

Maybe. Maybe not.

Educate yourself. Always know the consequences. Be prepared to pivot.

(A thank you to The Real Estate Solutions Guy and Robert Taylor.)