Why Now Is the Right Time to Buy—Even When Rates Are High

Florida mortgage experts Chris Doering, Chis Moebus, and Kristen Little sit down for a transparent conversation on how credit card debt has influenced the current mortgage landscape.

When we were going through the pandemic, one benefit was that we learned how to get closer as a family. We all learned how to be a little more simplistic, but another thing we were able to take advantage of was all-time low rates. A lot of people were able to buy homes during the pandemic, locking in mortgages that were below 3% in some cases. 

Chris Doering believes these low rates skewed the perspective of what a normal rate is. Right now, rates are in the low-to-mid sevens. Historically, that is very low compared to rates throughout the history of our country, but people don’t think of that as being a good interest rate anymore. People claim they’ll “never refinance again” because they have an interest rate in the high twos or low threes. Chris Doering emphasizes that one thing that has to be looked at is not only your mortgage situation but your overall financial picture.

During the discussion, Chris Doering states, “Credit card debt is at an all-time high.” Turning to his colleague, Kristen Little, he asks, “What have we seen recently with the credit card debt numbers?” 

“As of quarter three in 2023, credit card debt topped $1 trillion—with a ‘T.’” Kristen answers. 

Chris Doering continues: 

“Yeah, and I don’t think people realize just how much that money is just in evaluating their own situation—the difference between their mortgage interest rate is at low threes versus what they’re paying in the mid-twenties [for credit cards]. There are what we call situational refi (refinance) opportunities. A lot of people feel like they’re tied to this mortgage rate that they had back from mid-2020 to mid-2021 or so.” Turning to his other colleague at the table, Chris Moebus, he asks, “But taking a look at maybe what a sample family may have in terms of mortgage balance and payment versus what they have now in credit card debt, talk to me about what some of those numbers look like.”

Chris Moebus answers, “So we’ve seen some specific situations where we’re looking at families that are holding $100,000 in credit card debt with no end in sight. Basically, they’re just trying to make the minimum monthly payment. You’re talking about a $2,000,  $2,300, $2,400 monthly payment just to meet the minimum credit card balance.”

Chris Doering asks, “What are we seeing in the average credit card percentage rates right now?” 

“About 26% right now is typically what you’re going to see,” Chris Moebus answers. 

“So if you had $100,000 in credit card debt, what does that translate to roughly in monthly payment at that interest rate?” 

“You’re looking at about a $2,200 monthly payment, of which you’re not chipping away at the principal. Literally, there’s no end in sight with that money. You’re going to continue to make that $2,200 monthly payment, but the debt isn’t going anywhere. Your debt is staying right there. And the accelerated rates have certainly put most families in challenging situations. What we’re trying to work with and do here and explain to clients—because every client situation is unique—this is not a one-size-fits-all type of situation.” 

Chris Doering chimes in, “We talk about that an awful lot. I mean, it’s important for us to ask a lot of questions. It’s important for us to present a lot of options and see what fits somebody’s needs now, as well as in the long term. 

“What the future is, absolutely what their intentions are,” Chris Moebus nods and agrees. 

“So,” continues Chris Doering, “Let’s talk about the mortgage payment at a $300,000 balance at about 3.25% translates to what?” 

“You’re looking at about $1,400 a month in just principal and interest.” Chris Moebus explains. 

“So the combined payment between that at $1,400 on the $300,000 balance in the $100,000 credit card payment was about what?”

“Again, you’re about $3,400 or $3,500 combined for those two payments right there. And again, you’ve got to remember that, that $2,200, $2,300, $2,400 monthly payment on credit card, you’re not chipping away at the debt. You’re just kind of–”

“Paying the interest on it,” Chris Doering completes the sentence. 

Chris Moebus nods, “Yeah, you’re treading water at that point.”

“So let’s take a look at if we combine $400,000 into a payment in the low sevens or so,” Chris Doering says, “What does that look like in terms of cash flow improvement?”

“You’re looking at about $3,100 all in principal and interest on a 7.25% rate at $400,000,” Chris Moebus answers, “So you’re improving your cash flow by about $400 a month. More importantly, you’ve now moved that debt into a tax-deductible item, right? We don’t have a lot of tax deductions today, but mortgage interest is one of the fortunate ones that we still do have.”

“And we are not tax professionals,” Chris Doering clarifies for the watchers, “I’ll make sure I make that declaration. Consult your CPA or tax advisor as it relates to that. But we do know that’s a common known fact out there that you can write off your interest on your mortgage on your primary residence.”

“And there’s really no restrictions on mortgage interest,” Chris Moebus adds, “That is a kind of a one-size-fits-all because it is mortgage interest. So now, at the same time, you have an end in sight with that mortgage debt or that credit card debt. You now say, ‘Okay, listen, if I pay this mortgage off, guess what goes with it as well? All that credit card debt that I accumulated over the last several years.’ Whereas if you’re making that minimum monthly payment of $2,200, $2,300, $2,400, or $2,500, you’re not paying that debt down. You’re not chipping away at the actual debt. And the truth be told, the dollar doesn’t go as far today. You have expensive groceries. Everything costs a little bit more money—and not just a little bit, but sometimes, in some situations, a lot more money. This is a really, really good way to take control of your financial future by utilizing the money that you have in your home. You have to remember—equity is your money. The equity that you have in your home is your money.”

Chris Doering nods, “That’s a great point, and I think a lot of times people think of buying a home as incurring debt, where in actuality it’s investing into a savings account. It’s about being able to create an asset as opposed to a liability, and that money is yours that you’ve been able to accumulate. We’re seeing property values still continue to stay the same or go up. It’s not like the 2009 situation where home values have crashed. Interest rates are a little bit higher, but the equity largely is there for a lot of the borrowers that we get a chance to talk to. And I think one of the things that people need to be aware of is that you’re not tied to this house right now. People are afraid to move, but you can make the same argument that you’re able to consolidate debt by selling the house and putting a little bit less down payment if you do want to get out of the house that you feel like you’ve been tied to with the lower interest rate.”

Kristen Little chimes in, “Yes, we have a lot of customers that think that they need to take the equity from the home they own now and put it into their next home when they’re selling. But like you’re saying,” She says, referring to Chris Doering, “Sometimes, it benefits more to put down a smaller down payment and address some of these other credit card debts or consumer debts.”

After a brief pause in the conversation, Chris Moebus opens, “I think another thing that needs to be addressed here as well is the old idea of let’s get an equity line, right? Let’s pay off some of this. Debt with an equity line used to be pretty easy to do.” 

“They’re a good tool in certain situations, but not a one-size-fits-all,” Chris Doering adds. 

Chris Moebus agrees, “It’s not. And the IRS has changed some of the rules and regulations as far as using that interest as a deductible item. Equity lines that are not used to purchase at home are no longer tax deductible. The reality is we’ve watched interest rates go up over the years, and so that’s what your lines of credit are typically going to be tied into: your prime rate. So you’re going to be getting your equity lines somewhere in the 10s, 11s, 12%, which is going to be a much higher rate than you could if you were just to refinance the whole thing into an amortized loan.”

Kristen Little adds, “And for a shorter term.”

“And for a shorter term, without question. So the equity line used to be a very valuable tool. I think it used to work. I think in our discussions with our clients, that would’ve been something we would’ve advised years ago. But with the lack of the mortgage interest deduction now, as well as those elevated rates, it’s now changed and pushed that financial decision back into taking the first mortgage, taking that refinance, getting the cash-out refinance, having the control, and not having to worry about whether or not prime rates going to continue to go up because as prime rate goes up, your payment’s going to go up. So it’s lost a little bit of its luster. Again, it might work in certain situations, but I don’t think it’s quite the valuable tool that it once was.”

Chris Doering says, “And again, it’s not about, ‘Hey, here’s my mortgage rate.’ It’s about what’s the blended rate of all the debt that I have right now that I’m carrying.”

Chris Moebus nods and interjects, “Payment is really all that matters.”

“And one of the things that we’re doing—obviously, we don’t know what the timeline’s going to be—but whether the rates get back to a more normalized market here in the next year, two years, three years, all of our clients that we’re originating loans for right now, we’re going to go back and do refinances for them to give them the market rate that’s offered at that time with a severely discounted closing cost. We’re saving you up to about 45% with our no-lender fees and some of the reissue credits, the appraisals, and the surveys that we’ll use. So a great opportunity to take advantage now to save money, take some of the burden and the stress off of you, and be able to know that you’re going to have that long-term financing option available when the rates do inevitably go down.”

“I think that’s important too,” Chris Moebus says, “is understanding that folks are feeling the pressure of this today, and I think that is one of the intrinsic values of joy is not having to stress out about how am I going to make my payments every month? So it’s certainly a good consideration.”

Halftime With Chris

Chris Doering concludes, “So the old statement about, ‘Oh, you only want to refinance when you take your interest rate down by a full point,’—none of that is true. That’s one of the myths that we’d like to debunk as well. It’s important that you take a picture of a snapshot of the financial picture, in general, to evaluate where everybody is, and I think that’s one of the things that we do really well. It all comes down to experience. It all comes down to knowledge. It all comes down to, again, the origination platform that you have to make deals work, but we like to provide a lot of information to our clients. We like to give them options and see what fits best both now and in the long term. So we’d love to have the chance to sit down with you. We do offer free mortgage loan evaluations to take a look at not only your mortgage situation but the overall financial picture in general and see what we can do to help put you in a better position to accomplish your financing needs.”
As you can see from this conversation, the Chris Doering Mortgage team is passionate about what we do, but we’re even more passionate about helping people out. That’s why we offer a free, no-obligation loan consultation to look at your entire financial picture. We don’t see ourselves as loan originators—we see ourselves as mortgage planners. We analyze the overall situation you’re in now, talk through some of your goals, and come up with a financing plan that helps you achieve those both for the short term and the long term as well. Please, give us a call at (352) 244-0840, or fill out our contact form to secure your financial future with us today!