‘Buy now, refinance later,’ they said. Mortgage rates said otherwise.

Millions of Americans will move forward with home purchases this year, despite mortgage rates that won’t budge from their perch above 6% and home prices that continue to break records. Some of these buyers are banking on mortgage rates falling in the near future so that they can refinance into more affordable monthly payments.

Here’s the problem if you’re among those buyers: If rates don’t fall, you could be stuck with a monthly mortgage payment that weighs down your budget and leaves no easy options for managing the ongoing costs of home ownership, such as repairs and potential jumps in homeowners insurance and property taxes. This risk is especially pronounced for buyers who stretch their budgets to afford homeownership.

You can’t necessarily count on your real estate agent or lender to let you in on the risks. In fact, lenders and agents coined the cute tagline for this strategy: “Marry the house, date the rate.”

Take Justin Dance’s experience. He and his wife bought a house in Idaho in September 2023. Mortgage rates had risen to 7%, well above their pandemic lows of less than 3%. The consensus in the housing industry at the time was that rates would drop back to the 5% range.

“We thought, ‘There’s no way rates are going to be this high in two years,’” Dance recalled. Of course, they’re still that high. Dance’s disappointment illustrates just one way reality can get in the way of well-intentioned refinance plans. 

‘Significant’ risks for homebuyers

While “buy now, refi later” has become a mantra for some in the housing industry in recent years, you don’t have to look far for an expert who urges caution. 

“I am not a fan of ‘marry the house, date the rate,’ never was,” says Nicole Rueth, senior vice president at CrossCountry Mortgage in Englewood, Colorado. “It put a lot of people in tough situations now that rates have been higher for nearly four years.”

Say you stretch your housing budget now in hopes of saving $100 to $200 a month at some point in the future. If the refi doesn’t happen, you’re stuck with a higher payment that could hamper other financial goals, such as saving for retirement, building an emergency fund or stashing away money for your children’s education.

American homebuyers, especially first-time buyers, have been facing an affordability squeeze. U.S. home values have been setting one record after another – in May, the median price of existing homes sold in the U.S. rose to $429,300, the most ever for the month, according to the National Association of Realtors. At the same time, mortgage rates are stuck above 6% and the job market is weaker than it was a few years ago.

Meanwhile, home prices have risen faster than Americans’ incomes. As of April, buying a median-priced U.S. home required income of $122,775, well above the median household income of $85,994, according to the Federal Reserve Bank of Atlanta.

Given that ongoing squeeze, many buyers are paying more than they want – and hoping for the best. A 2025 survey by Truework, a company that verifies applicants’ income and employment on behalf of mortgage lenders, found that 56% of recent homebuyers were banking on lower rates to create breathing room in their budgets. Buyers continue to make that bet, which Ethan Winchell, co-founder and president of Truework, calls a “significant financial risk.”

“It’s a sticky situation,” Winchell says. “The whole industry has been expecting rates to fall. When there’s so much groupthink around a topic, it feels like a safe bet.”

The mortgage rate reality

Mortgage rates soared from less than 3% in early 2021 to more than 8% in late 2023. This dramatic swing prevented many Americans from buying homes, and sales volumes have been well below historical levels since 2023. 

Mortgage rates fell below 3% for only a brief period during the pandemic, but the memory of super-cheap money is powerful, and many Americans expect it to return in the near future. The reality so far has been much different. Since September 2022, mortgage rates have remained between 6% and 8%, according to Bankrate’s national survey of lenders.

Housing economists don’t expect much relief in the coming months. According to Fannie Mae’s May forecast, rates will stay above 6.3% for the rest of 2026. The Mortgage Bankers Association’s outlook calls for rates at 6.5% in the back half of 2026. As of June 24, the average rate on a 30-year loan was 6.48%, according to Bankrate’s national survey of lenders.

“Rates may not return to where they were, possibly ever,” Rueth says. “Many economists expect rates to stay in a narrow range for years to come.”

Calculating the break-even rate

Deciding whether to refinance is all about calculating the break-even period. That’s the point at which the lower monthly payment has covered your closing costs — which can include lender fees, title insurance, an appraisal and other costs.

“I look at it as you’re buying the house for yourself again,” says Jim McMahan, president of Benchmark Mortgage in Dallas. “You’re recertifying the title insurance, you’re updating the appraisal. There’s a cost to that.”

Say you’ve got a $400,000 loan at 7.25%, for a monthly principal and interest payment of $2,729. If rates fall to 6.25%, your new payment would be $2,463, or a savings of $266 a month.

If your closing costs are $8,000 — not unreasonable, given that closing costs typically total 2% or more of the loan amount — you’d break even on the refinancing costs in 30 months.

That’s far from a slam dunk. McMahan advises borrowers to aim for a break-even period of less than 18 months.

The risks of dating the rate

The “date the rate” mantra wasn’t designed to lead borrowers astray — when the phrase was coined, many in the housing industry assumed rates were destined to fall. However, homeowners and would-be buyers now are learning that even a well-intentioned bit of advice might not work out as planned. “Outside of Shakespeare, a rhyming couplet is somebody’s marketing slogan,” Winchell says.

Beyond the possibility that rates don’t fall in the future, there are other potential pitfalls that accompany counting on a future refinance:

Risk 1: Rates do fall, but not enough to justify the costs of a refi

If you’re lucky enough to refinance when rates have declined significantly, your break-even period could fall within McMahan’s guideline of 18 months. But if current mortgage rates are only marginally lower than the rate on your original loan, the math gets tricky. In some cases, lenders won’t require a new appraisal or new title insurance, and those savings can tip the decision in your favor. But some states — including Florida and New York — impose taxes on refinancing that can push the break-even point far into the future.

Rate-related risks underscore the importance of shopping around for your mortgage, ideally with at least three lenders. Offers can vary from one lender to the next, even on the same day. And because you might be stuck with a loan for a while, you want to grab the best deal you can.

Risk 2: Rates fall, but so does your income

While borrowers like to remember the pandemic’s 3% rates as the good old days of mortgage finance, the reality is that mortgage rates plunged because the economic news was terrible. The global economy was on the verge of collapse. If mortgage rates fall dramatically again, the move will likely be the result of a recession — and there would be no guarantee that you’d still have enough income to qualify for a refinance.

“Qualifying to refinance requires the same financial health as qualifying to purchase,” Rueth says. “Job changes, income fluctuations or a dip in credit can close that door entirely.”

Risk 3: Your home’s value falls, and you no longer have 20% equity

Say you paid $500,000 for a home a couple of years ago, put down 20% and borrowed $400,000. If your home is in Florida, Texas or another area where home values have dipped, your house may no longer be worth $500,000. And if it has fallen by even 5% — to $475,000 — the small mortgage principal payments in the early years of an amortization schedule may mean that you now have less than 20% equity in your home. Refinancing could require you to take on private mortgage insurance or to come out of pocket to make up the difference between 80% of the old value and 80% of the new value.

What you can do

Because there’s no guarantee that you’ll be able to refinance into a better deal in the future, focus on buying a house that fits your financial means today. And since you may be stuck with the same rate for awhile, be sure to compare offers from at least three lenders, ideally more. 

“Ultimately, ‘marry the house, date the rate’ works best when buyers purchase a home they can comfortably afford under today’s terms and view any future refinancing opportunity as a bonus, rather than a requirement for the purchase to make financial sense,” says Anthony O. Kellum, president of Kellum Mortgage in Roseville, Michigan. “The phrase can be a useful mindset for buyers who find the right home and are financially prepared for ownership, but it should never be treated as a guarantee that refinancing opportunities will materialize in the near future.”

Dance, the Idaho homeowner, kept that advice in mind when he bought his home in 2023. As a result, he said, higher rates were “annoying but not burdensome.”

It’s possible that in a few years, mortgage rates will be lower, your income will be higher and your home will be worth more. But you want to make sure you’re on solid ground even if those things don’t pan out.

“One of the biggest caveats I share with borrowers,” Kellum says, “is that they must be comfortable with the payment they are accepting today, not the payment they hope to have tomorrow.”