Should I wait for mortgage rates to drop?
Wait only if you cannot afford the payment today. If you can afford it today, buy and refinance later. Nobody, including lenders and economists, can name the date rates fall. The rate rose 0.25 points in the week of October 1, 2026, from 7.03% to 7.28%.
Will mortgage rates go down in 2026?
No one can promise it. Here is what a drop is worth. If the 30-year rate falls from 7.28% to 6.78%, a $400,000 loan saves $134 a month. If it falls a full point to 6.28%, it saves $266 a month. Here is what waiting costs: when rates fall, more buyers compete. A 3% price rise on a $400,000 home is $12,000, which is $82 a month at 7.28% and uses up 61% of the half-point saving. Metro Denver sat at 4.76 months of inventory in September 2026, so you have room to negotiate today. Read what the Fed rate hold means for buyers.
What does "marry the house, date the rate" mean?
It means the house is permanent and the rate is not. You pick the home for the street, the layout and the price. You treat the rate as the part you can change later by refinancing. Buy the right house at a price you negotiated. If rates fall, refinance.
Can I refinance later if rates drop?
Yes. A refinance costs 2% to 3% of the loan, which is $8,000 to $12,000 on $400,000. Divide the cost by the monthly saving to get your break-even:
60 to 90 months Half-point drop $8,000 to $12,000 cost, $134 saved a month | 30 to 45 months One-point drop $8,000 to $12,000 cost, $266 saved a month | Break-even month Refinance only if You keep the new loan past that month |
Thinking of selling first? Get a free home value report and read how to sell and buy at the same time in Colorado. Some lenders roll the cost into the loan, and the saving drops by the same amount. A refinance is a bonus, not a plan: do not buy a house you can afford only after a refinance.
Is it better to get a lower price or a lower rate?
Take the lower payment. On a $12,000 seller credit (3% of $400,000), a permanent rate buydown saves $201 a month and a price cut saves $82. Here are three ways to spend $12,000:
$82 Price cut of $12,000 Saves $82 a month for 30 years at 7.28% | $201 Permanent buydown to 6.53% Saves $201 a month for 30 years. Pays back in 60 months | $521, then $266 2-1 buydown Year 1 saves $521, year 2 saves $266, then the payment returns to 7.28% |
The price cut wins when the home is priced above what nearby homes sold for, and when you plan to sell within 5 years. The buydown wins when you keep the loan 5 years or longer. Builders pay buydowns too: see new construction incentives in Colorado and new construction homes.
What is a rate buydown, and should the seller pay it?
A buydown is cash paid at closing that lowers your interest rate. A permanent buydown lowers the rate for the whole loan. A 2-1 buydown lowers it by 2 points in year 1 and 1 point in year 2. Yes, ask the seller to pay it: with inventory at 4.76 months in metro Denver, Colorado sellers pay buydowns and closing costs. Ask for it in the offer.
Are discount points worth it?
One point costs 1% of the loan, which is $4,000 on $400,000. In our example it lowers the rate from 7.28% to 7.03% and saves $68 a month. The break-even is 59 months. Points are worth it if you keep the loan and do not refinance for 5 years or more. They are not worth it if you plan to move or refinance in under 5 years. Ask for the point price in writing, since each lender prices points differently.
How much house can I afford at 7%?
Every $100,000 you borrow at 7.00% costs $665 a month in principal and interest. A $3,000 monthly principal-and-interest budget buys a $450,900 loan at 7.00% and a $474,600 loan at 6.50%. Half a point of rate buys $23,700 more house. Use can I afford a home at 7% for the full budget with tax and insurance, then see affordable homes in Colorado.
Buyers at 7% get in with a small down payment. Credit score under 620? Read rent-to-own in Colorado. The $1,000 cash-to-close program and CHFA down payment assistance (620 credit score) cover the cash. Our lender partner, Mike Oswald at Rate, ran the numbers on this page. Get pre-approved with Mike and ask him to price your loan with and without points.
Mike Oswald, NMLS #261003. Rate, Inc., NMLS #2611. Equal Housing Lender. Licensing: nmlsconsumeraccess.org. You may use any lender; the Kenna Real Estate Group receives nothing for the introduction. Not a commitment to lend; loans are subject to credit approval.
Other ways to lower the payment: an assumable mortgage keeps the seller's rate, and a VA assumable loan does the same for veterans. See who is buying a home at 7% and the rent vs buy math.
What to watch out for
Seven traps that cost more than a half point
- ARM teaser rates. A 5/1 ARM that starts at 6.0% has a payment of $2,398 on $400,000. If it resets 2 points higher in year 6, the payment is $2,873. That is $475 more a month, 3.5 times the half-point gap. Read the cap on the Loan Estimate.
- Lender junk fees. A one-eighth point lower rate saves $33 a month on $400,000. $2,000 in extra fees takes 61 months to earn back. Put two Loan Estimates side by side and add the fees before you pick the rate.
- Waiting while prices and rents rise. A 3% price rise on a $400,000 home costs $82 a month. A 3% rent raise on $2,400 rent costs $72 a month. Waiting costs money every month.
- Assuming you will refinance. A refinance costs $8,000 to $12,000 on $400,000 and pays back in 30 to 90 months. Buy a payment you can carry at today's rate.
- HOA and metro district taxes. A $300 HOA is 2.2 times the half-point gap. Ask for the HOA dues, the reserve study and the total tax bill with the metro district levy before you make an offer.
- Hail insurance. Our examples use $4,200 a year, $350 a month. Get an insurance quote before the inspection deadline, because an older roof raises the price.
- Temporary buydowns. A 2-1 buydown ends after 2 years. Qualify for the year-3 payment of $2,737, not the year-1 payment of $2,216.
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