Lower price but higher rate? OR Higher price but lower rate?

[Manny Vasquez]

For those of you trying to “Time the Market” or trying to figure out the “Perfect Time to Buy”, either because you believe home prices will drop or because interest rates will drop (which they will in the very near future), I have a scenario for you.

Consider these two scenarios, in both cases you have the EXACT SAME Principal & Interest Payment

1. 1. You have a higher purchase price but lower interest rate.
2. 2. You have a lower purchase price but higher interest rate

Personally, I will ALWAYS take option #2 for several reasons:

1. 1. You can always refinance the rate, but you can’t refinance the price. This is in-line with the wise old real estate adage of “Marry the house, date the rate.”
2. 2. As we have witnessed in the past, specifically the years of 2020-2022, when rates dropped, everyone jumps in to buy a house, which drives up competition, which in turn makes housing prices go WAY UP to the point that people OVERBID on properties. (Hint-Hint: If you are waiting to buy, get off your seat!  Go buy now before rates drop and the buying frenzy jumps in!)
3. 3. Your insurance and property taxes will be set according to your purchase price. Having a lower purchase price will result in lower insurance rates and property taxes.

What do you think? Which option would you choose and why?