Buy Now, Refinance Later? Why More Denver Buyers Are Betting on Future Rate Drops

In the ever-evolving world within real estate, timing is everything—but perfect timing rarely exists when the time is right. At this time, many homebuyers in the Denver area are facing a dilemma: mortgage interest rates are higher than they have been in recent years, and it feels as if affordability is shrinking. Yet despite this, homes still sell, competition hasn’t vanished, with a surprising number of buyers still moving forward anyway. Why?

"Buy it now, refinance it later" is just a strategy that they're banking on that is gaining some traction nationwide.

Mortgage interest rates range from 6.75% to 7.25% given the loan product, borrower profile, and down payment in late May 2025. Even though it is still below the historical average over the last few decades, this is higher than the 2–3% rates seen in the pandemic-era buying frenzy.

Still, rates remain a major concern for the buyers. A payment gap results from a 4% rate versus a 7% rate on a $600,000 home. The mortgage payment can then actually differ by hundreds more each month. Understandably, some buyers press pause, hoping rates lower down soon.

But here’s the catch: when rates drop, demand goes up and home prices rise as well.

This approach is resonating since the “buy now, refinance later” idea rests after securing the home you want today, even with a higher rate, together with planning to refinance when rates potentially come down within the next 12 to 24 months.

1. The home prices that are in Denver still are climbing.
Home prices in Denver's metro housing market keep experiencing upward pressure. This is true even in a case with higher borrowing costs, most especially in desirable neighborhoods such as Berkeley, Sloan’s Lake, Wash Park, and Highlands Ranch. Limited inventory is fueling competition especially in the $600K–$900K range.

Because of how the home's price may have jumped, to wait could mean that later one is paying more even if rates are lower.

2. Inventory Is Tight
Due to the low mortgage rates in the last few years, many of the sellers are hesitant to list now. Denver's housing inventory is kept well below balanced market levels mostly for homes. Listings that are move-in ready still do realize multiple offers within hot city pockets at this current time.

Luck might not be on your side if you're hoping to wait until rates come down and inventory improves. That "perfect moment" just may be never arriving now.

3. Refinancing Differs From Its Earlier Form
Refinance options have lenders getting more competitive, and many offer low- or no-cost refinancing later under their starting mortgage deals. Some are even promoting “refi guarantees” in case rates drop within a set period. Find out what options your lender provides.

Assume you want to buy a $700,000 home now as the interest rate is 7% with 10% down. Your monthly principal payment total would be at roughly $4,193. This amount includes the interest payment.

Now you can imagine that you wait for a year and rates drop down to 5.5%. Increased demand, however, means that same home now costs $750,000. The amount you pay would fall to $3,834 or so. However, you have just spent $50,000 or more on the house.

Even when rates fall, higher home prices can cancel the savings plus you'll likely face more competition.

This approach is not a universal solution. Here’s what to weigh:

✅ "Buy Now, Refinance Later" might prove logical. When this occurs, here is the time:
Your boxes are each checked by the home that is found.
You can comfortably afford the payment at today’s rate since you are financially stable.
You have a plan to stay in the home for a time that is long enough to make it worthwhile. Refinancing needs generally three years or greater for help.
You've discussed refi options from a reputable lender. You also know your long-term plan.
❌ Waiting might prove helpful sometimes.
You’re stretching your budget. It needs for it to work at the current rate.
Staying in Denver long-term, your income, even your job is unsure.
You’re banking upon a major drop in home prices that’s unlikely in Denver neighborhoods mostly.

Based on several national and local reports including those from the Denver Metro Association of Realtors (DMAR), HousingWire, and Megan Aller’s monthly market analysis, buyers who act now may actually come out ahead if home appreciation continues as projected.

Denver agents who are seasoned are seeing that buyers who are well-prepared are winning homes today since waiting for “the perfect storm” of low prices and also low rates is more of a gamble than it is strategy, economists at NAR suggest, and they're happy to refinance later at the time when the math makes sense.

Denver is not slowing down and mortgage rates may fluctuate yet the supply and demand fundamentals have not changed. If you have been sitting on the sidelines, consider this as your nudge: you can always refinance at your rate, but you cannot go back in time to lock in today’s price.

Still unsure? That’s totally valid. To understand your options means that you are making a smart move since every situation is different.

Think about making a purchase within this year. Navigating high rates may prove difficult. Throughout Denver, I’ve helped dozens of buyers find their dream home without getting overwhelmed as priced out.

Create a workable plan via your goals for you today and tomorrow.