Marry the House, Date the Rate

We don't think there are going to be a lot of interest rate cuts in 2025. So, at what point does someone know to refinance their home, and how should they look at the interest rates and their mortgage? House prices are going to continue to go up because there continues to be a shortage of housing. We've got a supply-demand curve, basic seventh-grade econ issue. We've got a greater demand than we have a supply, and that puts upward pressure on pricing a hundred percent of the time. You cannot get away from that. There's no sophisticated analysis that makes that go away. So, house prices have continued to climb, even though the market has kind of sat in a doldrums, but the prices have not, you know, we're waiting on houses to come down. They're not coming down. They're not. Okay. So, what are we going to, well, we buy the house, we marry the house, we date the rate. So, you go and get the house. If you're out of debt, you have your emergency fund, you're ready to put down a down payment, and you can buy a house, buy a house, because it's not going down. And then if rates go down, you can refinance. The way you decide to refinance is just a break-even analysis, and you know this from accounting, is you just say, okay, what is the, if I go from a 6% rate, which as of this recording is about what the rate is, and it goes down to four, okay, and it's $200,000, well, that's $4,000 a year savings, 2% a year on $200,000 savings. I say $4,000 a year, it cost me $8,000 to refinance. Oh, that's a two-year break-even. I'm going to be in the home longer than two years. Everything after two years is gravy on the biscuit. Until then, I'm just making up my costs. And so, you do refinance then. But if you have a, you know, a nine-year break-even, you don't do it because the average home mortgage in America over the last 50 years is 5.5 years from resale or refinance, one of the two. And so, even though they're 30-year mortgages, 15-year mortgages, they don't last that long because the average home rolls every 7.2. And so, you're going to move, you're going to refinance, something's going to happen, and, you know, you will not have recouped your closing costs when you saved a quarter of a percent on the refinance. You can't do it, it doesn't work. So, you got to make enough to recoup quickly, and then your refinance will make sense. But that shouldn't keep you from buying. I'm going to wait on rates to come down and houses to come down. Houses aren't going to come down, rates might. So, let's marry the house and date the rate.