Should You Wait for Rates to Drop or Buy Your Way Out of Them?

Interest rates have everyone sitting on the fence right now. It feels smart to wait until the Fed cuts rates, then buy when things calm down. But what if that perfect window never really opens? What if prices rise faster than rates fall?

There’s another way to think about it. Instead of waiting for the market to bring rates down, some buyers are buying their own rate down through a tool called points.

Points are an upfront fee paid to your lender in exchange for a lower interest rate. They don’t change the price of the house, but they can make the monthly payment more manageable, and that might be the real win right now.

In today’s Seattle market, where prices are steady but rates hover around 6.5%, buying points can help a family make the numbers work without waiting another year. Let’s take a look at how this plays out.

Understanding the Basics

Before diving into the examples, here are a few key terms to keep in mind:

• Down Payment – The cash you pay upfront toward the home’s price.

• Points – Fees paid to reduce your mortgage rate, usually quoted as a percentage of the loan (1 point = 1% of the loan amount).

• Interest Rate – The cost of borrowing money, expressed as a percentage of the loan.

• Loan Term – The length of time you’ll pay back the loan, often 30 years.

Why Points Matter Right Now

If you have savings set aside, you can choose how to apply it:

• Put it all toward your down payment, lowering your loan balance.

• Use some of it to buy points and permanently lower your interest rate.

The right choice depends on how long you plan to stay in the home.

• If you’ll move or refinance within 5 years, points may not pay off.

• But if you plan to stay 10 to 15 years or more, the lower monthly cost can be a real advantage.

Real-World Example: $1.2 Million Home

Let’s imagine a Seattle home purchase around $1.2 million, with $240,000 in available cash. You can use that money in different ways — all down payment, or part points to lower your rate.

Even though the difference in lifetime cost isn’t massive, the monthly payment drops by about $600 between the high and low scenarios. That’s enough to ease budget pressure and make the home feel more livable day to day.

What It Means for You

Waiting for rates to drop feels like control, but it can also mean missing time in the market, home equity growth, and tax advantages.

Buying points doesn’t magically save you money overnight, but it can buy you:

• Stability with predictable, lower monthly payments.

• Momentum by letting you buy now instead of waiting.

• Equity growth, since you’re paying into your home instead of paying rent.

Finding Your Sweet Spot

Every family’s balance is different. If you know you’ll likely move or refinance in a few years, putting more down may make sense. But if you’re buying your long-term home, points can smooth out your monthly costs in a lasting way.

The goal isn’t perfection; it’s progress. In today’s market, understanding your options can help you stop waiting and start building wealth.