18 - What is Marry the House, Date the Rate?

One popular piece of advice given to first time home buyers is to “marry the house and date the rate.” This phrase refers to the idea of putting more emphasis on finding a house that meets your needs for the long term, and thinking of the interest rate in shorter or temporary term. We'll be taking a closer look at this concept and see what it means for you, the first time home buyer.

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Episode Transcript

Phil (00:00):
Welcome to the First Time Home Buyers Podcast.
One popular piece of advicegiven to first time home
buyers is to marry thehouse and date the rate.
This phrase refers to the ideaof putting more emphasis on
finding a house that meets yourneeds for the long term, and
thinking of the interest ratein shorter or temporary terms.

(00:21):
Let's take a closer lookat this concept and see
what it means for you.
The first time home buyer.
When you're looking for a home,you should focus on finding one
that suits your lifestyle andyour needs, rather than focusing

(00:41):
solely on getting a great price.
After all, if you find yourselfmeet your needs, chances are
you won't be happy no matterhow great of a deal you got.
It's important to pick outfeatures like bedrooms,
bathrooms, locations, thingslike that that really fits your
family size and the amenities.

(01:01):
Things like your poolor the outdoor space.
It's really gonna maximizeyour enjoyment of the
property if you'repurchasing a starter home.
Ensure that it meets yourneeds now and has the
right features to make itattractive to future buyers.
The idea of marrying thehouse is to consider it
a long-term commitment.
The idea of dating the rateis that it's a short-term

(01:25):
temporary commitment.
So let's talk about thebenefits of dating the rate
before even shopping for a.
, you should have spokenwith your lender and
discussed your budget.
Part of this discussionwill be around the interest
rate that you qualify for.
Interest rates changedaily, so keep that in mind.

(01:45):
In a higher interestrate market like today,
you have a few options.
To get better rates, you couldincrease your credit score.
You can increaseyour down payment.
You can buy down therate, which essentially is
money you pay in cash thatlowers your interest rate.
In each case, it's dependenton your circumstances,

(02:05):
how much this willactually affect your rate.
But the idea of dating the rateis simply that you're betting on
rates going lower in the future,or your credit increasing enough
that you can refinance intoa better interest rate loan.
nobody knows exactly whatinterest rates will do, so
you're simply betting on themgoing down or your credit

(02:28):
score going up enough that it'sgonna give you options in the
future if rates never go down.
You're still married tothe house at whatever
rate you originally gotwhen you purchased it.
I don't particularly carefor this saying, but the
idea is solid behind it.
You should buy a home forthe long term, and the
interest rate is somethingyou can change months or

(02:50):
maybe even years later.
Let's do a quick history lessonon mortgage interest rates
for a 30 year fixed loan.
In the seventies, rateswere in the mid 7% range.
They started to increasearound 1974 through the
end of that decade where itreached an average of 10.11%

(03:11):
by the end of 1978 in 1981.
Mortgage rates topped outat 18.45% and remained
in the double digits foralmost the entire decade
By the late nineties.
Mortgage interest ratesdropped below 10% and they've
hovered around six to 7% fornearly the last 20 years.

(03:35):
We of course, saw huge dropin rates in 2020 with December
rates at a record low of 2.68%and most of 2021 with rates
in the high twos and low 3%.
In March of 2022, ratesbegan to see rising numbers
into the six to 7% rangeduring each high and low.

(03:57):
People still bought homesduring the low rates.
People refinanced out ofhigh interest rate loans
like those that bought inthe eighties at the peak.
Interest rates when theyrefinanced in the nineties,
some of them cut theirpayments nearly in half,
That's the idea ofdating the rate.
The important factor is toensure that you can afford the

(04:19):
payment that you're making.
If interest rates neverdrop, then you're fine.
If they do drop, then you'regonna be able to save money.
At the end of the day,deciding to buy a home.
Is a big decision, one thatyou should make very carefully.
Make sure you're doingyour research, choosing a
house that's right for you.
And when it comes to deciding onan interest rate, don't panic.

(04:41):
If rates are high, remember thatthey can change at any point.
You can always take advantageof those rate changes to
save money in the future,but, It may be years out.
So when it comes to datingthe rate, just consider
that an added bonusto your home purchase.
Some loan programs even havestreamlined refinance options.
Many lenders have options torefinance it, low or very low

(05:04):
cost to you to help you getinto a more affordable loan.
So if you'd like to knowmore, feel free to reach out.
But head on overto fthbpros.com.
Where we have all of our podcastepisodes available, articles
and newsletter resources,along with our Facebook group
where lenders and agents canhelp answer your questions.
Thank you for your supportand happy home buying.