If you have a mortgage in 2020 or 2021, you can have what seems an unbeatable treatment. But falling in love with his mortgage rate could be a bad life decision.
In a recent episode of The Ramsey showThe hosts John Deloney and Ken Coleman gave similar advice to Lauren in Detroit, Michigan, who moves with her husband after three years of marriage. He rents, while she has a house with approximately $ 100,000 in capital and a fixed mortgage rate of 2,875% (1).
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Lauren asked him if he should keep the house and his unique mortgage rate in life and rent it, but Deloney and Coleman offered a blunt response.
“See it today and put $ 100,000 in a new house,” said Deloney. “Who cares about that stupid interest rate, man. People are parking their entire life in this unique interest rate in a millennium.”
“It just is not worth it, that’s why we were so fast to say ‘sell it’ and move on,” Coleman added
Building capital by charging the market rate rental in a super low interest rate loan may seem like a good business, but the devil, as always, is in the details. Lauren and her husband plan to live in a place that is two hours from her home, which would make her an absent owner. This means that every time a toilet overflows at home, Lauren has to leave everything to drive four round trips, or have to hire a property administrator.
Meanwhile, if the payment of your home is not well below the market rate for rent, the profits you obtain could be consumed completely maintaining your property. In addition, as owner, he has to deal with the potential responsibility and legal discomfort if his tenants are not happy.
Assuming that you can sell your property and clear $ 100,000 after paying the rest of your mortgage, you could put that money to buy a new property with your husband, and both will build capital together instead of spending money on rent.
Yes, the interest rate in the new place will be higher than its current rate, but the guide of Deloney and Coleman is clear: it does not freeze its life due to a rate of less than 3%.
Lauren is in a position similar to millions of other Americans. Its mortgage rate of 2,875% is well below the average fixed rate of 30 years, which has been around 6.3% in September 2025, according to Freddie Mac (2).
To give some weight to that number, consider that a 30 -year loan from $ 200,000 to 2,875% puts the monthly payment of Lauren by approximately $ 1,200. Meanwhile, with 6.3% are paying around $ 1,613, which is approximately $ 413 more per month.
That gap creates a powerful “blocking” effect. Federal housing researchers found that when market rates exceed the original rate of an owner at a percentage point, the possibility of selling that house falls by approximately 18%. Consequently, the low -rate blocking effect has significantly reduced sales since 2022, according to the Federal Housing Finance Agency (3).
High rates also press first -time buyers and younger homes, which depresses transactions and maintains the tight inventory. Governor Adriana D. Kugler, of the Federal Reserve, said that higher mortgage rates reduce purchases by low -income and younger buyers, which contributes to the weakest housing property for children under 45 years (4).
A background mortgage rate is a strong incentive to maintain, but it is definitely not a reason to derail your family plan.
Read more: Here are 5 simple ways to enrich themselves with real estate, whether you have $ 10 or $ 100,000 to invest
To solve this, Lauren can begin by verifying current market income using at least three comparable listings or recent leases to see what the property could earn realistically.
Next, you must describe each cost of ownership, including the mortgage payments, property taxes, insurance and a repair reserve equal to one percent of the value of the house every year.
Once these numbers are clear, Lauren can calculate if the rent would generate a significant positive cash flow. If the figure looms near the equilibrium mark, that is usually a strong signal that makes more sense to sell.
Beyond mathematics, Lauren should also consider the discomfort. If the stress of handling tenants, maintenance and vacancies feels heavier than the potential reward, that must be part of the calculation.
Finally, if the sale seems more practical, Lauren can estimate how much money would move away after paying the mortgage, covering the commissions of the agents and handling any tax. Once you know the net income, you can put that money to work in a joint budget with your spouse so that every dollar has a clear purpose.
While a mortgage rate of 2,875% is excellent, it is not exactly a great reason to delay the financial plan of your marriage. The data show that the low fixed rates make the owners reluctant to move, and that the reluctance can stop larger objectives.
As Deloney and Coleman pointed out, rental mathematics must be spectacular so that the cost is worth it. To keep your life simple and in the future, the best option for Lauren can be capital, unify your finances with that of your husband and make a decision that serves as life instead of your enviable interest rate.
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(1). The Ramsey Show Hetecirs: You Tube. “Behold, you shouldn’t keep your home”
(2). Freddie Mac. “Archive”
(3). Federal Housing Finance Agency. “The blocking effect of the increase in mortgage rates”
(4). Federal Reserve. “A vision of the real estate market and the economic perspective of the United States”
This article provides only information and should not be interpreted as advice. It is provided without guarantee of any kind.
