Why I'm a Big Believer in the Adage 'Marry the House, Date the Rate'

Oh, to go back to the good old days when few of us had ever heard the term "marry the house, date the rate." I do believe I rolled my eyes the first time someone said those words in my presence. But now? Now, I'm a big believer that home buyers should indeed "marry the house and date the rate." Here's why.

A whole slew of unhappy buyers

The homeowners insurance company Hippo conducted a survey in 2022 after two years of red-hot home sales. By surveying more than 1,000 new homeowners, Hippo wanted to understand how the U.S. housing market impacted buyers. It found that many homeowners regretted their decision to buy, saying it caused financial instability in their households and took a toll on their well-being. In fact, 86% of pandemic buyers reported having regrets.

Another study -- this one by Clever Real Estate -- asked buyers about their biggest regrets. Here are the top four responses:

• Exceeded my budget: 45%
• Higher interest rate than desired: 42%
• Homes are too expensive: 42%
• There's too much competition: 38%

Dating the rate

Do you see that second response, "higher interest rate than desired"? For most new homeowners, it's a temporary problem. They can trade that rate in for a lower one once they drop. In other words, they're not married to it. They're just dating.

We're in the exact same boat. My husband and I traded our low rate in Kansas City for a rate 2% higher when we moved to Illinois. While that may not sound like much, it amounts to thousands of dollars a year we're paying our mortgage company rather than tucking away in a high-yield savings account or otherwise investing.

I can't let it bug me, though, because we've refinanced enough mortgages to know how beneficial it can be. We're dating our current interest rate.

Married to the house

The issue is a bit different for those who say they exceeded their budgets to purchase a home, particularly if they overpaid for the property. Let's say a person tours a home on the market with a listing price of $300,000. They think it may be what they're looking for and get into a bidding war with another buyer. In order to put the stress of house hunting behind them, they offer 10% over the asking price, or $330,000.

If the market has softened in a year or two and their new home isn't worth $330,000, they can't go back to the former owner and negotiate the price. The moment the seller accepted their purchase offer, they married that house.

Why experts don't expect home prices to fall anytime soon

While there is never a consensus among experts, few expect housing prices to decrease along with interest rates. In an interview with CBS News, Doug McCoy, director of the Center on Real Estate Studies at the Indiana University Kelley School of Business, gave these seven reasons for believing home prices will remain level or increase as rates continue to drop:

1. There continues to be a limited supply of homes on the market
2. Potential sellers are staying put
3. Employment is strong
4. Wages are rising
5. The number of new household formations is up
6. Interest rates are coming down
7. The cost of building a new home is on the rise

How "marry the house, date the rate" works

If McCoy is right and home prices remain level or increase in 2024, "marry the house, date the rate" will work like this for home buyers:

• The home buyer shops around, looking for the mortgage lender with the lowest interest rate.
• The home buyer finds a home they love.
• They negotiate a fair price, knowing they can't come back later to renegotiate.
• They sign mortgage papers with the understanding that they will refinance the home when the rates drop.

I do recognize the risks. What if a buyer can't find a reasonably priced home? What happens if it's years before interest rates drop enough to justify refinancing? "Marry the house, date the rate" is an imperfect philosophy, but it's the best rule for some of us.

Most of the moves my husband and I have made have been job-related. We've moved when it was necessary, and sometimes, that was during shaky housing markets (hello, 2008). People don't always have the option of waiting. For those buyers, it's important to remember that paying a fair price for a home is more important than scoring a low interest rate on a mortgage loan.