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"Date the Rate - Marry the House"

You’ve heard the old expression, “Date the Rate but Marry the House.” The

idea is that you can always refinance the loan, but the right house may not

come around again. But with rising interest rates and falling home

inventory, many buyers are wondering if this mantra still rings true. Should

you marry the house at whatever interest rate is available?

First, the US lending market has been experiencing record low interest

rates. In May of 2000 saw the 30-year fixed rate rise to an average of 8.6%

before falling to 6.5% in July of 2008. Historically, any long-term interest

rate under 6.5% was considered exceptional. The pattern of rising and

falling interest rates has been repeated multiple times in the past 40 years

and likely will continue.

While purchasing an unaffordable home with the hope of refinancing

quickly into a lower rate is a poor strategy, so is waiting on the home that

you like or need if you can manage the payment. A simple truth of the

housing market is that as rates increase, home values usually decrease as

more buyers are forced from the market. This offers the opportunity for

buyers to find a home previously unaffordable. When rates do decline, they

can refinance for even more savings.

The concept of “Date the Rate and Marry the House” is not new. Home

buyers in this real estate climate need to be more intentional about the

home they choose and the costs incurred. Rates will most likely increase

before they fall, so weighing the lower home price to the higher interest rate

is a personal decision to be taken carefully.


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