Over the last few years, a real estate truism has popped up that you may have not heard before: “date the rate, marry the home.” As mortgage rates have gone from historic lows during 2020 and 2021 into higher territories starting in 2022, this phrase has been repeated over and over by real estate agents and other housing experts since.
But what does it mean to “date the rate, marry the home?” And is this a foolproof strategy?
Join us as we dig into what this saying means, and how it can help you on your homebuying journey. Or, if you’re ready to start dating, talk with a Premia Senior Mortgage Consultant about today’s rates.
Date the Rate, Marry the Home Meaning
This saying is based on the idea that buying a home is a long-term commitment, but the terms of your mortgage can be revisited. Essentially, you “marry” a home by looking for a property that has the elements that will matter to you for years. Then you “date” the rate by getting the best rate you can when you purchase, then “break up” with the rate by refinancing when it makes sense.
What it means to marry the home
The term marriage suggests a lifetime commitment, “for richer or poorer, through sickness and health, ‘til death do us part” as the common ceremony goes. This is similar to how many people approach buying a home. According to a recent report from Redfin, the average homeowner stays in their home for 13.2 years, which is not quite a lifetime, but is still quite the commitment.
It makes sense that people are staying in their homes for such a long time. Not only is there the financial commitment, but with fewer and fewer homes coming onto the market in some parts of the country, it can be hard to find another home that satisfies your needs as well as your current home.
That’s why when you find a house that you fall in love with, you shouldn’t hesitate to “put a ring on it,” as it were and make an offer. If you don’t it may not be on the market long enough to allow you to wait for rates to come down. And you may have a hard time finding another home that checks all of your boxes as well.
What it means to date the rate
The term “dating the rate” really just refers to all of the financing options that a lender like us can offer you. While national average rates may go higher, you have more than one option that will allow you to bring down your mortgage rate, at least for a period of time. And there’s always the option of refinancing, which we’ll explore in more detail below.
But first, here are a few of the loan programs that our loan officers can offer that will help you possibly get a lower rate.
Buydown
A temporary buydown reduces your interest rate on your mortgage for the first year or few years of your loan. The seller or lender contributes to your loan to lower the rate during the initial period, and then payments go back up after that initial period is over.
We offer five types of temporary buydowns. The most common is called a 2-1 buydown, but there’s also a 3-2-1 buydown, 1-1-1 buydown, 1-0 buydown, and 1.5-0.5 buydown. Their names correspond with the periods of lower rates—so a 2-1 Buydown offers a 2% lower rate for 1 year and a 1% lower rate in the second year before the rest of the mortgage reverts to its original rate.
Both of these options change your mortgage rate over a period of time, which reflects the uncertainty of your dating life. But refinancing your mortgage is usually what people are referring to when they say “date the rate.”
Adjustable Rate Mortgages (ARMs)
An ARM is a type of mortgage that offers you an initial period at the beginning of your loan where the rate is fixed lower than the national average rate at the time you close your loan. Then after that period is over, the rate varies, oftentimes increasing so that you’ll be paying more than you were during that initial period. Typically the fixed rate period lasts 5, 7 or 10 years
Calling it quits on your rate
When you refinance your mortgage, it’s kind of like breaking up with your rate and getting a new, better rate. A refinance (or “refi” as it is commonly referred to) is simply a way to replace your original mortgage agreement with a new contract that contains updated terms and rates that are more attractive. That means if rates come down since you closed on your initial mortgage, you can refi into a lower rate and potentially pay less each month.
You can also refinance to shorten your loan term, change from a variable rate to a fixed rate, and even take out cash to use towards renovations or consolidate debt. Reach out to your Premia Mortgage Consultant today. They’ll guide you through our refinance options, helping you find the best deal with minimal to no lender fees!
Being smart while dating the rate
The “date the rate, marry the home” strategy works well when rates drop, but that can be hard to predict. Mortgage rates are hard to predict and can rise and fall over the years. It’s important to know that you’ll be able to afford your mortgage payments when you buy the home, then wait for the right mortgage rate to come along to improve your situation.
That’s why partnering with an expert or a trusted lender like Premia is so important! They’ll help you make the best choices for your needs. Just like in dating and marriage, it’s all about finding someone you can trust when it comes to your mortgage!
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply.
Savings, if any, vary based on the consumer’s credit profile, interest rate availability, and other factors. Contact Premia for current rates. Restrictions apply.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Premia for current rates and for more information. All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Premia Relocation Mortgage, LLC. does not guarantee the quality, accuracy, completeness or timeliness of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error-free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Premia Relocation Mortgage, LLC. Premia Relocation Mortgage, LLC. does not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action. Premia does not provide tax advice. Please contact your tax adviser for any tax-related questions.