Source:https://www.youtube.com/shorts/Aq-fb-LPbpM

The phrase "Marry the House, Date the Rate" has been thrown around recently in social media and real estate circles. What does this mean? Let’s talk about it, and tell you that it could be bad advice. 

What exactly does “Marry the House, Date the Rate” mean? 

“Marry the House, Date the Rate” means that if you find a house you love and can afford, you shouldn't let the current interest rates stop you from buying it. Instead, you should use the rates to motivate you to purchase the home. 

Can you refinance later? Absolutely.

Here’s an example: A property initially purchased for $500,000 and has seen an increase of 10% in the last two years is now worth $625,000. Because of the present interest rates, you may be paying an extra $12,000 in interest. Still, you could be getting $75,000 in appreciation.  

Most real estate agents say you should marry the home and date the rate. Every cycle has its own unique opportunities. You can buy a home at an affordable price, enjoy the rising value for a while, and then refinance your mortgage debt later.

It's almost too good to be true. Right?

When “Date The Rate” Becomes Bad Advice

Here’s the dilemma. 

Does this mean I could take on a mortgage I can’t afford and hope that one day I’ll be able to refinance it at a lower value? No! 

Like, imagine dating someone. You wouldn't say, "Yeah, it sucks now, but it'll be better in the future." 

That’s how ordinary people understand that statement. Without clarity, it could be misleading. 

The Truth about Refinancing

Here’s some light on refinancing. It is not recommended to have a mortgage for the long term. Most homeowners will rent their properties many times throughout their ownership. Because mortgage rates continue to decline, they find themselves in need of cash from their equity.

There is no limit to how many times you can refinance your mortgage. But most mortgage lenders won't let you refinance again until you've made at least six mortgage payments. This is because mortgage servicers punish lenders when a loan is paid off early. A refinance will incur charges linked to closure.

So, should you follow this advice or not?

Even though this statement is rather witty, bear in mind that you may be dating the interest rate for a more extended period than you would typically choose. There is no way to predict when mortgage rates will begin to level or gradually decrease. 

We do not believe they will fall to the levels we have seen over the last several years. From our perspective, we will be very fortunate to see interest rates drop below 5% anytime shortly. 

Having said that, if you did lock in a rate today and mortgage rates continue to rise, you'll be pleased you locked in your rate before it was too late. 

If you want to discuss this matter further, don’t hesitate to contact us today. Because here at Loft Realty, we are the difference you deserve.