The saying “date the rate, marry the house” has been tossed about lately.
The idea is simple. Purchase the house you love now, regardless of financing terms, and refinance in the near future when mortgage rates improve.
This seems like a good strategy, but is it? If a crystal ball told us that mortgage rates would improve in the future, then yes, it is. You lock down “the one” now at a higher interest rate and refinance later at a lower interest rate to lower your monthly payment.
But, is this the right advice?
There is no way to predict when or even if mortgage rates will decline. We can’t guarantee that you will be able to refinance in the future. Could you have predicted that interest rates would be below 4% for a decade? Did we also predict that interest rates would double in less than 9 months this year? I surely didn’t.
What I always say is – Buy when life tells you to buy. If you can afford the payment with the house you love NOW, then buy it. If rates come down in the future, then it’s a bonus! Refinance and lower your payment. But don’t buy now and get yourself into a payment that you struggle to make thinking you will just refinance in the near future. This is the type of advice that could cause a future of short sales and foreclosures if interest rates keep rising.
So how can you marry the house and the rate right now?
Watch our latest episode where Matt and I talk about Date the Rate, Marry the House, home buying rules to break, and a weird sale for $800k but you can’t live in the house.