When It’s Worth Giving Up a Low Rate

Thinking about moving can feel daunting in today’s housing market. Trading in your current mortgage rate — especially if it’s much lower than today’s — may give you pause. But a higher rate doesn’t always mean it’s the wrong decision. Sometimes, the long-term benefits of the right home outweigh the short-term comfort of a lower payment.

Here are a few reasons why giving up a low rate can sometimes make sense.

1. A Growing Family

Each new addition to your household (including pets) can make your once spacious home feel a little more cramped. Moving to a larger home with more yard space, bedrooms, bathrooms and closets can solve the problem. While it may stretch your budget initially, it can pay off long-term as the property appreciates. Plus, refinancing at a lower rate later is always a possibility.

2. A Shrinking Household

As the nest starts to empty, all that extra space can suddenly seem superfluous. Downsizing to a smaller home not only feels cozier, but can also save on maintenance costs, taxes and insurance. Plus, it’s an opportunity to choose a home designed for aging in place, with fewer stairs, ramp access and other safety features. Maintaining your independence with an improved quality of life can be well worth the higher monthly payment.

3. A Career Opportunity

While it can feel difficult to give up a lower rate, moving for a stronger career opportunity may make sense. Better pay and benefits not only help secure your financial future, but also help offset any increase to your monthly housing costs. It may feel like a tradeoff now, but it could lead to lasting gains.

Of course, the key consideration in all three scenarios is affordability. If giving up your lower rate will cause significant financial struggle, waiting is usually best. In the meantime, you can always focus on saving up for a down payment on a future home purchase when the time is right.

Any questions? Reach out to discuss your financing options.