How to Combine a Home Purchase and Refinance Strategy in 2026
- Maria Tornga
- Nov 29
- 3 min read
The Strategy Behind "Buy Now, Refi Later"
You've probably seen the phrase everywhere — but behind the slogan is a real financial play that's working for informed Michigan buyers.
It's not about timing the market. It's about controlling what you can: purchase price, cash position, and future rate flexibility.
If you expect rates to ease in 2026, the goal isn't to wait.
It's to set up your 2025 purchase so refinancing becomes easy, low-cost, and worth it when the window opens.
Step 1: Lock the Asset, Not the Rate
Prices in Michigan's major markets — Lansing-East Lansing, Grand Rapids, Detroit, and Kalamazoo — are still trending upward.
Recent data shows:
Lansing-East Lansing: up ≈ 11 % year-over-year, after steep early-2025 gains (Realtor.com & Michigan Mama News)
Grand Rapids: ≈ 7.5 % year-over-year (Redfin, Sept 2025)
Detroit Metro: ≈ 17 % gain in first half 2025 (Michigan Mama News)
Kalamazoo: ≈ 5.6 % year-over-year (Redfin)
Buying now locks in your asset price, not your final rate.
You control your entry before prices rise further.
You start building equity immediately.
You keep flexibility to refinance when rates improve.
You can always refinance your loan.
You can't refinance your purchase price.
Step 2: Structure Your Loan with the Refi in Mind
Not every loan is refinance-friendly. Look for:
No prepayment penalty. Always non-negotiable.
Low or no points. Save upfront costs to make your future refi more efficient.
Streamline options. FHA and VA loans offer streamlined refinances that can skip income and appraisal verifications.
Flexible terms. If you plan to refi, a slightly higher-rate loan with lower fees may actually improve your two-year ROI.
At Mortgage Up, we model both loans side by side — the "today loan" and the "refi target loan" — to see how they align over the next 24 months.
Step 3: Keep Your Financials Refi-Ready
Treat your refinance window like a second closing.
You'll need clean, current documentation and predictable credit behavior:
On-time payments for at least 12 months
Steady income and employment records
Limited new debt accounts
Credit utilization under 30 %
If you're self-employed, avoid over-deducting on 2025 tax returns. Lenders look at net income after expenses.
Step 4: Know Your Exit Math
A refinance only makes sense if the savings outpace the cost.
Track three benchmarks:
Break-even point: How long until lower payments offset closing costs (typically 12–18 months).
Equity growth: Reaching 20 % equity lets you drop PMI on FHA → Conventional refis.
Rate gap: A 0.5 – 1 percentage-point drop usually makes a refi worth it if you plan to stay 2 + years.
We map refi checkpoints for clients — often around Q3 2026 for this market cycle.
Step 5: Use the Refi to Level Up
A 2026 refinance isn't just a rate reset. It can be a strategy move:
Reinvest equity into a rental or second home
Consolidate 2024–2025 consumer debt
Shorten loan term without raising payment
Think of it as phase two of your wealth plan, not just a redo of paperwork.
Real Example: West Michigan Buyer
A client purchased a $325,000 home in late 2024 using an FHA loan with 3.5 % down.
By mid-2026, they expect to refinance into a conventional loan after values rise and rates improve.
That refi would:
Remove mortgage insurance
Lower monthly payment by hundreds of dollars
Convert built equity into a stronger financial position
That's what intentional financing looks like.
What to Do Next
✅ Review your purchase and refi numbers side by side.
✅ Project your break-even and equity timeline.
✅ Set a refi reminder for mid-2026 so you don't miss the window.
Let's map your 2026 home strategy now.
Comments