Stop Waiting for Rates to Drop Before Buying a House

Waiting for lower mortgage rates could cost you $200,000. You found your dream home. The neighborhood is right. The size is right. The price is right. But you see a 6 and a half% interest rate and your buddy told you that rates are going to 5% by the summer. So you wait. Here's what nobody tells you about that decision. The math almost never works out the way you think it will. Trust me from experience. And at the $1 million plus price point, being wrong doesn't cost you a few thousand dollars. It can cost you hundreds of thousands of dollars more. I'm Matt Guier. I've been a mortgage broker for 12 years. And in this video, I'm going to walk you through three things. First, the real relationship between rates and home prices that most people get completely backwards. Second, the actual math on what waiting costs. And third, the specific situations where waiting actually is the right call. Because I'm not here just to tell you to go buy something. I'm here to help you make the smartest decision for your specific situation. Whether you buy, whether you wait, whether you work with me or not, that's completely up to you. I just want you to make this decision with the right information in front of you. All right, let me start with the concept that changes everything. And I want to be really clear about this because it's the most misunderstood thing I see at the $1 million plus price level. Most people think this rates are high right now. So, if I wait for rates to drop, I'll get a better deal. I'll have a smaller mortgage payment. It sounds logical, right? But here's what actually happens in the real world. When rates drop, more buyers enter the market. Demand comes back. More buyers means more competition. More competition means prices go up. It's simple supply and demand. So the lower rate you waited for, it gets eaten up by the higher price you're now paying. I've seen this happen time and time again over the last decade plus in mortgage. Think about what happened between 2020 and 2025. We had historically low rates, rates that none of us had ever seen before. And what happened to home prices? According to the FHFA, this is a cool stat that I found, US home prices were up just over 1% year-over-year as of Q4 2025. But zoom out, look at those 2020 prices compared to where they are today. And prices ran up dramatically during that low rate environment. It varies, as we've talked about on this channel many times, from state to state and from city to city, but humongous inflation between 2020 and 2025 in regards to home prices. Low rates didn't make homes more affordable, right? People waiting until rates got to 2 and a half% also paid another 100, 200, $300,000 for their house. So, these lower rates made the homes more expensive because demand increased. Everyone rushed in at the same time. Now, here's the flip side. When rates are higher, like they've been over the last couple years, buyer demand cools. There's less competition. There's more inventory, more negotiating power. In tons of real estate investment groups I'm in, people are super excited when rates go higher. They get to go out there and write price discounts, seller credits, and all kinds of cool stuff, right? Realtor. com and other places online, I'm seeing them. They're calling 2026 a balanced market, right? with about 4. 6 months of supply on average. That's the closest thing we've had to a normal market in years. And in a normal market, you can negotiate. You don't have to get out there and make offers on day one. You don't have to offer 100,000 above list and wave your contingencies and all the wild stuff we've seen in past years. So, you ask for credits. You can be a little bit pickier. You can take a deep breath. So, if you're waiting for rates to drop, understand what you're actually waiting for. You're waiting for a market where you have less leverage, you've got more competition, and you've got higher prices. That's the trade you're making. Now, mortgage rates in 2026, I'm not going to sit here and tell you that I have a crystal ball, but I can tell you that they're not directly controlled by the Fed. I want to say that again because you're going to hear it everywhere and people are going to talk about there's a new Fed chair and the Fed chair is going to cut rates. The Fed controls short-term rates. Mortgage rates are driven by all kinds of other things. Inflation trends, the bond market, the 10-year Treasury, global demand for US debt, economic growth or slowdown. This is the reason why you've seen the Fed cut rates, the Fed funds rate, that is. And mortgage rates either stay still or they go up. We just saw that last September leading up to a Fed rate cut. We saw rates go down. the Fed cut the Fed funds rate and mortgage rates went up about a half a percent. Right? So, you have to realize that stuff. The market prices in these expectations well before the Fed acts. So, if you're reading the headlines and you're not paying attention, you're thinking, "Oh, in June or July or August when the Fed cuts rates, that's when I'm going to buy. " The Fed cutting rates does not directly correlate to mortgage rates going down. Let that sink in. Really understand that. And I think it's

important because too many people I see fall into that trap where I'm going to wait for this to happen. I've talked about rates coming down isn't going to be the best time to buy for a lot of people, right? And basing a $1 million plus home purchase decision on that assumption can be a very, very expensive mistake. So, as always, I want to show you guys actual math. I think seeing the numbers, talking the numbers is a great way to have it sink in. And this is where it gets real, right? A half a% rate difference on a million-doll mortgage is about $5,000 a year. That's about $400 a month. Now, that sounds significant, and it is. But here's the question you should be asking. What does the home cost if you wait? Let's say you're looking at a million. 5 home today. Lots of parts of California, that's not even a high-priced home to be honest. But you're looking at a home for one a. 5 million. You're fully preapproved. you can buy, but you say, "You know what? I might wait. I'm going to wait 12 or 18 months because I heard or I'm hoping or I just think that a half a percent rate drop is going to help me out. The mortgage is going to be a little bit cheaper if I buy at the exact same price, right? But here's what happens in real life. During those 12 to 18 months, the home goes up price-wise. And we don't have, it doesn't have to be a huge price jump. They just go up modestly, right? Like I said earlier, US home prices were up just over 1% year-over-year as of Q4 2025, and that was the national average. In a desirable market or a market where inventory is constrained, appreciation might be higher. California, for example, a stat that I've shared with people is over the last 40 years, they've seen about 5. 9% appreciation. So, even at a conservative appreciation rate, let's dissect this $1. 5 million home. You can't come back and buy it at 1. 5 million. You're paying a higher price and 1% over a year or 2% over a year is a 15 or $30,000 difference in that home price. The other part that people don't talk about a lot is you hoped for rates to go down or you heard that rates were going to go down. There's no guarantee, right? So, you're buying it at a higher price, maybe a slower interest rate, maybe not. The economy doesn't have any obligation to cooperate with your timeline. So, here's what I need you to understand about the rate side of this equation. The most likely uh 30-year fixed rate mortgage rate range for 2026 is high fives, low sixes. Now, if you're paying attention, that's where we're at currently. And we've seen some more recent stuff with inflation and some conflict overseas where rates have ticked up a little bit. We've seen other stuff that's caused rates to tick down, but they're going to bounce around in this range. High fives, low sixes. We're not going back to 2% to 3%. That was an anomaly. That's not the norm. But we're also not likely to see sevens and eights like we've seen over the last two or three years. So the question isn't whether rates will be dramatically lower. The question is whether the modest rate improvement you might get is worth the price appreciation you'll miss. This is the problem I'm seeing and this is the part that people forget entirely. Rates are not permanent. You can always refinance that $ 1. 5 million home. If rates go down over 12 or 18 months, great. You refinance to a lower rate. What most people find out is that they pay 1. 6 six a year later and rates are the same or they've only come down by a quarter percent and those two don't offset each other. Warren Buffett has a great quote that makes me feel good as a mortgage broker. He thinks that the 30-year fixed rate mortgage is one of the best financial instruments ever created. And it's simple if you think about it. The bank is never going to call you and say, "Hey, we're going to refinance on our side because we're looking to get a higher interest rate for your loan. " Nobody's calling on your 2021 loan and saying, "Hey, you're at 3%, but since rates are currently around six, we want to refinance you to 6% and have you pay more. " They can't do that. You're locked in. But on the flip side, if you bought something in 2023 and 24 and you got a 7 and a half% rate, you got a great deal because the market was slower and not as many people were offering with those higher interest rates, you call the bank, you call your mortgage broker, you go to mtmg. com and we say, "Yeah, rates are at about 6%. let's refinance you into a lower interest rate. It doesn't change what you paid. It doesn't change the great deal you got and the seller credit you got. You can always refinance to better terms. So if you buy today at 6 and a half and they go to five and a quarter, great. In two years you refinance. What you don't want to do is pass up on the deal at 6. 5% where you can buy the house for 1. 5 million. Rates go to five and a quarter and now people can afford more and they're able to pay 1. 8 for that same house, right? You cannot refinance

a purchase price. If the house goes from 15 to 165 or from 15 to 18, that 150 to 300,000 is gone. Whereas, as discussed, right, the mortgage rate can always be refinanced. You can always go lower. So, that's the asymmetry that most people completely miss. waiting for 5% could cost you way more than buying at 6% or six and a quarter or wherever rates are currently at based on your specific scenario. And I think a lot of people don't understand that whole reason I'm making this video, right? So, let's talk about what waiting cost you beyond just the purchase price because that's not it's not just 1. 5 at 6 and a quarter today versus 1. 65 at 5 and a half 18 months from now. You also have to take into consideration every single month you wait, you're still paying for a roof over your head. housing. If you're renting at $3,000 a month, while you wait for the perfect condition, that's $36,000 a year going directly to your landlord. People talk about rates all the time, and I've heard it, and there's some truth to it, that 36,000 is 100% interest. None of it goes towards anything you own towards your equity. So, that money is gone. You're not getting the tax benefits of home ownership. You're not locking in your housing costs. You're just paying someone else's mortgage. And the wealth gap here is real. Another study that I can cite, which was a good one, it showed homeowners had a medium net worth of, depending on the study you look at, it was 400,000, it was 500,000. And they looked at the median net worth of renters, and that was between five and 10,000. So, in these studies, it was talking about a 40x difference between the net worth of a renter versus homeowner. A lot of this has to do with the appreciation you see and the quote unquote forced savings that goes along with owning a home. Owning a home doesn't magically make you wealthy. But home ownership forces a few things to happen, right? You pay down your principal over time. Every month, a part of your mortgage payment goes towards paying that loan down. You benefit from that appreciation. Like I talked about, California has seen 5. 9% over the last 40 years. And you lock in your housing costs. As a renter, if you've rented for any period of time, you realize that landlords raise rents, right? Your rent can go up every year. Your 30-year fixed rate mortgage payment cannot. All right. So, lastly, let's talk about how you make a decision because I don't want to tell everyone you must buy right now. As anybody who's ever talked to me would attest to, when I have a conversation about buying a home and home ownership, my whole goal is to make sure I'm talking to this specific individual, right? And saying that everybody should be buying a home in the next 3 months. That's not honest. It's not ethical. It's not helpful. There's absolutely situations and I have them every single week where I talk to people about waiting and waiting makes sense. But here's a simple framework that I walk every client through. you can use it and I'll give it to you in a simple format right comes down to three buckets bucket one can you comfortably afford the payment today and this is a question that I don't answer for people you know the answer to this and I want to be really specific about the word comfortable right technically qualifying and getting a pre-approval letter does not mean you're comfortable with the payment and there's a lot of stuff outside the scope of what lenders look at to qualify you and just say you make 10,000 a month. You've got $600 a month in other debts. We'll qualify you for a $3,900 a month mortgage. And at $4,500 in total debt versus your $10,000 in income, you qualify. That's technically qualifying. I'm talking about is $3,900 a comfortable payment for you to make. There might be stuff that doesn't show up on the credit report. You've got daycare to pay for. You've got a kid going to college. you've got all kinds of other stuff where you say, "Listen, I pay $3,100 a month in rent. " And that's about as much as I can do. So, that's what you aim toward, right? Can you comfortably afford it based on today's numbers, today's rate, today's terms? And again, that's a number for you to decide. If your plan is to buy now and refinance later so you can afford it, like that's not a plan I get with, right? Bunch of fancy catchphrases about marry the house, date the rate. That's not me. I don't want you to be gambling with your housing situation. You buy a house where the payment works today. Refinancing is just a bonus. Refinancing is an upside. It's not the plan. So, if a simple test that you can do to kind of walk through this for your own situation is if you're currently renting for $3,000 a month and your future mortgage is going to be $4,500 a month, what would it look like if you started paying $4,500 a month right now? Pay your rent and put an extra $1,500 into savings. For a lot of people I talk to, they go, "Yeah, I can afford $4,500 because not only have I paid my $3,000 a

month rent, but I've put $3,000 a month into a savings account specifically for the down payment on this house. So, I know that it's in the budget. It fits. I can do it. " Do that for 90 days, 180 days. Do it for a year if you have to. If that crushes you, you just learn something really important. If you can do it comfortably, some of the conversations I have, then you're training for the real thing and building a down payment at the same time. All right. Bucket two. Are you buying for the right reason? Buying because you're scared of missing out is a bad reason. Buying because people tell you that you have to buy a bad reason. Buying because you have a stable life, a stable job, a stable plan, and you want to lock in housing long term, you realize that's a good long-term decision. That's a real reason. There's no such thing at as signing a 30-year lease, right? I've never heard of someone signing a fixed rent agreement for 30 years. Yep. $3,000 a month. It's going to be the same next year and five years and 10 years down the road. The your landlord can raise your rent, sell the property, or ask you to leave for one reason another give you notice. Your mortgage payment is locked. But let me be clear. If you don't have stability in your life, job stability, income stability, even relationship and mental health stability and a time horizon where you plan to be in this house, in this city, in this job for three, five plus years, I don't think buying is right. And I don't care if rates go down to 5%. Buying could still be a mad bad move for people that don't have the stability piece. The fact that the 2026 market is going to be more balanced doesn't mean that people who are unprepared to buy should buy. All right. Bucket number three. Are you going to stay long enough for the math to actually work? And this is where people may be misguided or they just don't do their own kind of thought analysis around this. They buy with a short-term mindset. Unfortunately, this is where societyy's at where they're looking for a quick reward or they're looking for something that's going to be a meme stock or a memecoin get rich overnight, right? Real estate gets you rich long term. So, don't get emotional. Don't react to what the market is doing. Real estate is slow and to be honest, it's expensive to transact. So, you don't want to do it wrong. it only really works when you give it the proper amount of time and attention needed and you plan to be there long term. Now, I'm not saying that someone's buying their forever home and you're going to be there for 30 plus years, but buy it with intention. If you upgrade in the future, which I always tell people to look at the first purchase as a stepping stone and something that might be a future rental or it's at least in a neighborhood where the resale value is going to be great so that you can use it as a stepping stone, but at least have a 5-year plus time horizon for this house. Here's where 2026 is interesting. Right now, I mentioned 4. 6 months of supply and a more balanced market. Buyers have an amount of leverage that they haven't seen in a long time. Rates spiked up to seven, seven and a half percent over these past years. You saw a little bit of this leverage. You still have it in a lot of markets in 2026. You can negotiate price. You can ask for seller credits. You use those credits to buy down your interest rate either permanently or temporarily. Uh you structure a deal that makes sense for your specific situation. I'm seeing a lot of our clients get some of the best deals I've seen in a long time. whether it's an investment property or something that they're going to own or occupy. And it's not that prices are crashing. And it's not only in parts of Florida or Austin, Texas. It's all over the country. And it just has to do with the fact that the market is rational again. If you bought when a lot of people bought in 20 and 21, low rates was great, but the market wasn't rational. People were paying way above list. They were waving contingency periods. It was a wild time. So, if rates come down while you own the home, you get to refinance. So, you win on both ends. And that's why I think this balanced market is great for a lot of people who are in a position to buy. You get the price from today and this balanced market we're in, and you get the lower rate when it comes in the future. That's the smart play. Now, I said, I'm not convincing everyone to buy. And I promise to tell you when waiting makes sense because it does sometimes and I have conversations about it all the time and I want to be straight. If your financial foundation isn't solid, if your credit score needs work, um if you don't have any reserves, if it's your last dollar going towards this transaction, your income isn't stable, you should wait. But waiting doesn't mean just throw in the towel and you're done. Wait with a plan. Work on your credit score. Every point matters for for people in this position because your rate and your payment are directly tied to your credit, right? You're going to get better terms at a 660 than you do at a 620. Better terms at a 700 than you do at a 660. So, build

your credit. Build your reserves. And I don't just mean down payment. Some people have a number they shoot for down payment wise. Build your reserves as well, which is money you're going to have after the closing because life happens. and you buy a $1 million home and you've done all the numbers and you know what everything costs and you can afford the monthly payment. There's realities about maintenance and owning a home isn't all sunshine and rainbows, right? You might have a repair that comes up, an AC that needs to be replaced, a roof needs to replace. So, cut your debt, get your debt to income ratio in a healthy place. This is all the same advice you would get from a financial adviser about getting stuff in order. And to be quite honest, the best mortgage brokers are debt advisors. So, I want you to do it responsibly. in a way that helps you win in the long term. If your time horizon is less than five years, you've probably fit into this bucket, too, where you got to look at it more carefully. Maybe it doesn't make sense. If you've got a job that is going to have you moving in two years or three years, maybe you should look at renting, right? For some people in this position, they decide to change what they're going to buy and they buy something that's going to turn into an investment property. But you might not buy the million half dollar house if you're moving in three years. Transaction costs and agent commissions and closing costs and moving costs. It might not justify this large financial decision. And renting isn't a failure. It makes sense to a lot of people, right? Renting is patience. I heard something on Dave Ramsey, and I disagree with Dave Ramsey on a lot of stuff, but he said something to somebody about renting and said, "It's a great three-year plan, but don't make it a 15-year plan. " Right? You don't want this to be the forever plan, but it might make sense for now. So, don't let your patience turn into paralysis and never buy. But doing it for a few years is going to be the advice I'm quite honestly going to give to some people. Real estate is local. This is another place where people get themselves into trouble. they watch a national headline or they see something about the Florida market or the Texas market or some other market, right, where things are going one way and they think that it applies to their local market and it just doesn't, right? It's very localized. Balanced national market can still mean that one market has multiple offers and three counties away, you're seeing price cuts and seller credits and 90 days on market. So, you need to understand your specific market, your specific price point, your specific neighborhood before you make a million-doll decision about the home you're going to buy. Here's what I need you to hear, though. Waiting feels safe. Most people wait because they think it's the conservative move, but waiting has real risk, too. Prices can go up, rates can go up, competition could come back. I mean, you can lose options. I talked to some people that unfortunately were in a position to buy and they were qualified and they were ready and things made sense. they waited themselves into a situation where it no longer made sense. Maybe they didn't qualify. Maybe conditions in their specific market just got worse. But don't let that happen to you. Even if prices don't spike, you can still lose time. And time matters because ownership is a long-term game. Anybody who's in real estate knows that it's investing in stocks, right? You just let the market do its work and you hold it for the long term. The market doesn't have to explode for waiting to cost you money. it can slowly kind of vaporize away. All right, let's bring it all together and I'll close this down. I don't want to be too long-winded. If you have stability, you have a plan to stay put, you have strong credit or a plan to fix it, you have reserves, and the payment fits your life comfortably based on today's numbers, stop trying to time the market, and just start trying to buy the right house. Quick thing I've told a lot of clients, and I think it makes sense, use the 801010 rule. It's 80% of the things you're looking for in the house, 10% you can fix or upgrade, and 10% you can learn to live with. You're never going to find a house that everything's perfect. Right? If you are going to wait and now's not the time, just make sure you wait with a plan. Not just waiting and hoping conditions improve, actually work in the plan. I plan to get my credit up to 700. I plan to pay off all my student loan debt and get this car paid off. I plan to have $20,000 in reserves on top of my down payment. Getting really clear on your location, understanding max payment is comfortable with you. Because here's the bottom line. Every year you wait, you're still paying for housing. The only question is whether that payment is building your future or someone else's. But when your life buy when your life is ready, not when the market's perfect. Now, if you want to go deeper on this topic, one of the most common questions I get from people in this situation is about what actually happens when you're ready to pull the trigger, specifically around the pre-approval process and what lenders are actually looking for at a specific price point. I did a video breaking down exactly what mortgage preapproval looks like and why it's not as scary as you think. Go watch that next. The link is right here. It's the logical next step if today's video resonated with you. If you want to talk through your specific

situation with me and my team, go to mtmg. com. We'll map it out together. I'm happy to help. Thanks for watching.