DATE THE RATE, MARRY THE HOUSE!
Story By Greg Makos – Mortgage Loan Originator | NMLS 2078075 [email protected] Click Here to Apply!
This slogan captures a fresh way to look at the process of buying a house. There’s no denying that we are in turbulent times in regards to mortgage rates across the country. However, committing to the house does not mean you have to commit to the current rate forever. Savvy homeowners will always look for better financing availability. Should better rates and terms present themselves, they will jump on the opportunity to refinance. If rates continue to get worse in the immediate future, you will be glad you married the house when you did.
We often define dating as a stage of romantic relationships in which two individuals engage in activity together, most often with the intention of evaluating each other’s suitability as a future long-term partner. The reference to dating the rate, simply speaks to the idea that you are not necessarily locking yourself into a lifelong decision with your rate. With rates fluctuating up and down over time, the market will likely present you with an opportunity to refinance your mortgage in the not-so-distant future. You can engage in the activity of a mortgage, without necessarily putting a ring on it. Once a better partner becomes available, you can change your marital status on social media and re engage in the market.
While we can compare the interest rates to dating, the house is more permanent, like your spouse. Finding the house that you consider to be “The One” can certainly happen at any time, regardless of what is going on with the interest rates. The rate will certainly play a role in determining a borrower’s affordability, and lenders and realtors alike, will need to take it upon themselves to make sure their clients fully understand how the process works prior to tying the knot. Another thing for borrowers to consider, is how long they intend to remain in the new house. Career goals and plans, can certainly alter the type of loan that best fits the current needs of the borrower.
The common question we are hearing right now is “Are rates high?” The answer requires a bit of research in order to provide some perspective on the market. Currently, the 30-year fixed rate on a conventional mortgage is between 2-3% higher than the all-time lows (2.68%) that we witnessed in December 2020.On the flip side, in 1979, the average was over 15%. Rates ballooned even further to all-time highs in 1981, where average rates were over 18%. Rates hovered in the 10% range throughout the 1980s, and hovered in the 8% range for most of the 1990s, dropping below 7% only on rare occasions. Prior to the 2008 meltdown, rates hovered in the 6-7% range, and only dropped into the 5% range after the economy collapsed. So, while rates are higher than our recent “all-time lows,” they are still far lower than where they have been for most of the last 50 years. Research is always important no matter what decision you are making.
For some perspective regarding marriages, data collected by the National Association of Realtors indicates the average homeowner stays in their home about 13 years. Meanwhile, according to Goldbergjones.com, the average marriage lasts about 8 years. Shop with the understanding that nothing lasts forever, especially a relationship with a less than attractive interest rate. If you are prepared to write your vows, or sign the final contract, allow me to play matchmaker and find the rate that best fits you!