“Date the rate, marry the house”: The lure of refinancing when buying a home
“Date the rate, marry the house”: The lure of refinancing when buying a home
Existing home sales for July were way down, about 17% from a year ago, the National Association of Realtors reported Tuesday.
Home sales have been slow mostly because mortgage rates have been high. The average rate on a 30-year fixed has once again cracked 7%.
A familiar refrain is reentering the chat for would-be homebuyers: ”Well, you can always refinance.”
It’s been a very long time since mortgage rates were this high. Think the turn of this century, from the late 1990s through 2001. So you’d forgive homebuyers for already considering a refi even before, you know, the original fi.
“You hear a lot of folks in the industry talking about ‘date the rate, marry the house,'” said Mike Fratantoni, chief economist with the Mortgage Bankers Association. “You’re going to be in the house for a long period of time, but you may be in this mortgage for just a couple of years.”
Date the rate, marry the house, aka eat the high monthly payment to get a foot in the door and then refinance after the Federal Reserve declares inflation officially whipped.
“So if you can find a home that you like, you can afford it, and then plus you have the option down the road of potential refinance if rates drop, that’s a pretty good combination,” Fratantoni said.
And if rates don’t drop, well, you still have the house with a 30-year fixed mortgage.
There’s even date the rate, marry the house memes on housing social media. Sacramento real estate agent Erin Stumpf isn’t a fan.
“I think it’s a little misleading,” she said. “The market fluctuates all the time.”
Stumpf said even if mortgages get cheaper, so might homes, which would complicate a refi. And she’s still scarred from that “you can always refinance” mantra that contributed to the foreclosure crisis.
“You know, 2007 was 16 years ago. I think that maybe has faded a bit from people’s memories a little bit more, but I certainly remember what it was like,” Stumpf said.
The good news is borrowers are much better credit risks than they were in the late 2000s, and banks are much more choosy about who gets a mortgage in the first place.
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