Don't Fall in Love with Your Interest Rate
Interest rates are like the sun: they go up, and they go down. If you bought a home while rates were unusually good—a 3.5% 30-year fixed mortgage, for instance—it can be tempting to feel trapped in your good fortune. How can you justify selling with a rate that good? You’d have to be crazy to give it up if the best you can get now is 4.75%, right?
We understand this logic, but respectfully disagree. After all, does it make sense for a percentage or two of a loan to dictate the direction of your life?
As human beings, we are biologically wired with a stronger aversion to loss than a desire for gain. This served us well in the jungle, when mortal threats loomed around every turn—but in the 21st-century real estate market, this bias can hold you back from bigger, more important goals.
Instead of being limited by fear, ask a higher-level question: What is your outlook for the next 5, 10, or 15 years? Is your family growing? Do you want to raise your kids in a different neighborhood? Do you want more land? Do you want to build?
We would argue that the answers to these questions are vastly more important than the percentage point or two you stand to lose by moving to a new property. Interest rates are still very low by historical standards, and if you work with a good mortgage broker, your rate may not rise as much as you think.
If you have good reasons to move that support you and your family’s goals, don’t let your ancient instinct to mitigate loss hold you back. Take a historical perspective, work with a professional you trust, and most of all, trust yourself to be worthy of the life you want to lead.