Damn good article: They bought homes with the intention to refinance. Now they’re stuck

[Chase]

They bought homes with the intention to refinance. Now they’re stuck​

https://www.latimes.com/california/...h-the-intention-to-refinance-now-theyre-stuck

Steven and Katherine Wolf jumped into home ownership in fall 2022. They also stretched, buying a Bakersfield home that carried an uncomfortable monthly payment.

Steven Wolf figured within a year rates would drop enough to allow them to refinance and put hundreds of dollars back into their pockets. That hasn’t happened and isn’t expected to soon. In fact, rates are higher.

Across the country, many buyers employed similar strategies — at times encouraged by real estate agents and mortgage brokers who earn a commission on each deal. The tactic could still work, but as interest rates stay higher for longer, some express varying degrees of regret as their finances buckle.

In theory, the strategy Wolf and others employed is supposed to work like this.

Buy now — when rates are high and demand low — and you’ll easier snag a home than waiting until rates drop and reignite extreme bidding wars.

By acting now, a home’s purchase price will be lower. The monthly payment will be high, but that will go down once rates decline and you refinance.

As some say: Marry the house. Date the rate.

Personal finance, of course, is complicated.

When refinancing, you pay loan fees and other closing costs, which can surpass several thousands of dollars. Consumers must weigh those upfront costs against any savings on the monthly payment.