Jul 18, 2024
As the star of Netflix’s “Owning Manhattan” and a renowned real estate broker, Ryan Serhant has become a trusted voice for many aspiring homeowners navigating the complexities of the housing market. And he has some advice for some of those would-be buyers: “Marry the house and date the rate.”
In an interview with Realtor.com, published June 24, Serhant shared insights into his home-buying philosophy, particularly the strategy popularly known as “marry the house and date the rate” — meaning, commit to a long-term relationship with a house you love but be ready to refinance when mortgage rates begin to change.
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The approach has its risks and rewards. Let’s consider some of both.
Understanding the philosophy
Serhant has shared his real estate expertise with reality television viewers for a number of years. From his early days on “Million Dollar Listing New York” to his latest venture, “Owning Manhattan,” Serhant has guided buyers and sellers through the highs and lows of real estate transactions.
Under Serhant’s “marry” mantra, buyers are encouraged to prioritize finding the perfect home even if it means paying a higher mortgage rate at first. The idea is that the home itself is a long-term investment (marriage), while the interest rate is temporary and can be refinanced when rates drop (dating). Buyers focus on securing their dream home now, expecting to renegotiate financial terms later.
“Your monthly payment can change, but you’re not renegotiating the sale price of the house,” Serhant told Realtor.com. “You’re not renegotiating the house and the location. If you find a house you really like, let alone love, figure out how to make it happen and you will live into it.”
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Risks and pitfalls
Serhant’s advice has practical appeal, but it’s important for potential homebuyers to understand the risks.
While the idea is to refinance at a lower rate later, there’s no guarantee that rates will decrease. In fact, they could remain high or even increase, leaving homeowners stuck with a higher-than-expected mortgage payment.
Additional risks include the following:
Refinancing costs: Refinancing often involves closing costs and other expenses that can add up. Buyers need to factor in these costs when considering whether the initial higher rate is worth it.
Financial stress: Committing to a home with a high interest rate can strain a buyer’s finances. Higher monthly payments can limit cash flow, making it harder to save for other financial goals or handle unexpected expenses. This can be particularly stressful if the expected rate drop and subsequent refinancing opportunity don’t materialize.
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Market volatility: Economic downturns, changes in the job market or other unforeseen events can affect a buyer’s ability to refinance or even maintain their mortgage payments.
Equity risks: If home values decrease, homeowners may find themselves with less equity than anticipated. That can complicate refinancing efforts and result in higher loan-to-value ratios, which can lead to less favorable refinancing terms.
Balancing the strategy with caution
While Serhant’s strategy has its advantages, buyers should do their homework. Here are some tips to balance this strategy:
Assess financial stability: Before committing to a higher rate, buyers should assess their financial stability and sock away a robust emergency fund in case rates don’t drop as expected.
Understand refinancing: Buyers should educate themselves about the refinancing process and associated costs. Consulting with a financial adviser or mortgage expert can help you decide whether the strategy makes sense for your situation.
Consider fixed vs. adjustable rates: Some buyers might consider an adjustable-rate mortgage (ARM) as an alternative to one with a fixed rate. ARMs typically offer lower initial rates that adjust after a set period. However, this comes with its own set of risks, as future rate adjustments are uncertain.
Long-term planning: Buyers should have a clear long-term financial plan that includes potential scenarios where refinancing may not be possible. This includes having a strategy for managing higher mortgage payments over an extended period of time.
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Chris Clark is a Kansas City–based freelance contributor for Moneywise, where he writes about the real financial choices facing everyday Americans—from saving for retirement to navigating housing and debt.
