“Date the Rate, Marry the House” - What Financial Coaches and Educators are Saying About Homeownership in 2023

As interest rates rise and the housing market remains competitive, anyone on the hunt for a place to call their own faces the same dilemma: buy now, when interest rates are rising? Or keep renting, and postpone the benefits of homeownership?

If you’re in this predicament, you may have heard the phrase “date the rate, marry the house.” 

This saying means that you should buy your dream home, with the intent to refinance later when interest rates decrease.

Is this really a solid strategy? Or could you be stuck with a bloated mortgage payment? 

We asked a handful of financial experts and financial content creators for their perspectives on the “date the rate, marry the house” approach. 

Here’s what we found:

Go for it! But prepare to marry the rate, too.

John Pham, founder of The Money Ninja, cautions that there’s a chance you’ll be stuck with your original interest rate. However, he says, that shouldn’t stop you from purchasing a home:

“The government has made money cheap to borrow since 2008, but that has recently stopped and may not return to that level again. People need to keep in mind that even today's higher rates are still historically low.”

In other words, while interest rates do seem comparatively high, this may be the new normal. If rates continue to climb, in the future, today’s interest rates may even seem quite low.

Borrow based on your current financial situation, not the future

Jonathan Thomas, financial coach and host of Money Talks, is passionate about encouraging people to become homeowners. Still, he compared relying on a potential refinance to relying on a potential higher income…not such a great plan:

“When you take on any loan, especially a mortgage, you should calculate it with the intent that you will never have the opportunity to refinance. You should make decisions under present circumstances – meaning the money you have in your hands now.”

In other words, don’t abandon your mission to buy a home, but DO stay within your current means. Check out the Money Talks YouTube channel to learn about paying down debt, purchasing a home, and more.

Take an informed approach

As a personal finance educator and author of the book “Life is Short, Buy the House,” Nia Adams is passionate about helping individuals prepare for homeownership—but she still recommends educating yourself before proceeding:

“I recommend potential homebuyers be mindful that they must prepare. In order to ‘date the rate’, they must be able to fund and qualify for a refinance. Many don’t know the ins and outs of refinancing and find themselves married to the rate they were supposed to be dating.”

If you plan on refinancing, you’ll need to keep your personal finances in good standing. Stay on top of your budget, your savings, your debt levels, and your credit to ensure you’ll fit the mortgage refinancing requirements when the time comes.

Focus on paying off your mortgage, instead

Derek Sall, founder of Life And My Finances, advises taking a goal-oriented approach regardless of your interest rate:

“If your mortgage is over 6%, buy within your means and pay off your mortgage ASAP,” Sall suggests. The idea is that, rather than hoping you’ll save on interest expenses by refinancing, you can instead save on interest expenses by paying your loan off early. 

To make it work, you’ll want to secure a monthly mortgage payment that allows for wiggle room in your budget. This way, you can dedicate extra funds to your home loan each month. 

Try using the Life And My Finances mortgage payoff calculator to help you pay off your home loan as quickly as possible.

Over-mortgaged and underwater

Nadia Vanderhall, founder and CEO of a financial content marketing company, noted that 270,000 homeowners who purchased a house in 2022 are “underwater” in their mortgage, meaning they owe more on their home than what they could sell it for. 

This also means that these homeowners will have a hard time refinancing their mortgages for a reduced monthly payment, since the value of their homes may not align with the amount owed on their loan.

Learn more about Vanderhall’s perspective here.

The bottom line

We hope this wide variety of perspectives has helped you hone in on the best course of action, based on your unique goals, financial situation, and timeline. When in doubt, always consult with a financial advisor for professional guidance.

Whether you’re just starting your homeownership journey or already looking into refinancing your home, your credit is of utmost importance. Keep your options open by building and maintaining a healthy credit score with StellarFi.

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