Buy Now, Wait, or Refinance Later? I Asked Lenders

The Wyoming Way, a blog by Ali Williams

Interest rates come up in almost every conversation I have with buyers. People wonder if they should buy now, wait for rates to drop, or buy a home and refinance later. I had some of those questions myself, so I reached out to a couple of lenders to help me understand the lending side a little better.

Here’s what I learned from their answers.

What about “marry the house, date the rate”?

You’ve probably heard this saying. The idea is that you choose a home you love now and refinance if interest rates drop later. There’s some truth to it, but the part I don’t want buyers to miss is that refinancing is a possibility, not a promise.

You can’t go back and change the price you paid for a home. You may be able to change your interest rate later, but only if rates drop, you qualify for a new loan, and the numbers make sense. So if you’re going to “marry the house and date the rate,” make sure you can afford the date you have today.

Refinancing later is possible, but it isn’t guaranteed

If rates go down after you buy a home, you may be able to refinance into a new loan. But you would still need to qualify at that time. Your credit, income, debts, employment, home value, and equity can all play a part.

A lot can change after you buy a house. That’s why I wouldn’t want anyone to take on a payment they can only afford ifthey refinance later. The payment needs to work for you today.

A lower rate doesn’t always mean refinancing makes sense

One of my questions was how much rates would need to drop before refinancing would be worth it. The answer is different for everyone.

Refinancing can come with costs, and a lender can help you compare those costs with what you might save each month. For example, if refinancing costs $4,000 and saves you $250 a month, it would take about 16 months to make up that cost. How long you plan to keep the home matters, too.

Should you wait for rates to drop?

That depends on your situation. Lower rates may bring more buyers into the market, which could mean more competition. Home prices could change while you wait, too. But waiting may absolutely be the right choice if you need more time to save or aren’t comfortable with the payment available to you now.

As a Realtor, I can help you look at homes and understand what’s happening in the market. A lender can walk you through loan options and what the full payment could look like. Those conversations together can help you decide what makes sense for you.

My biggest takeaway is that refinancing could be a helpful option down the road, but it shouldn’t be what your entire buying decision depends on. Make sure you understand the numbers and feel good about the payment you’re agreeing to today.

For this post, I brought my questions to Laura Tetrault and Layla Kelley with Integrity Edge Team, powered by Radiant Mortgage. Thank you both for taking the time to answer them and help me better understand the lending side of buying a home! ??