Does selling make sense if you have a low interest rate on your current home?

There’s no denying that the real estate market is in a frozen state. Buyers are hesitant, and
sellers are even more so. If you were fortunate enough to purchase a home and lock in an
attractive 3% interest rate, you might find yourself in a conundrum if you’re flirting with the
idea of selling.

So, should you stay, or should you sell?

Here’s the truth. It’s entirely dependent on your unique circumstances.

When Should You Sell?

Selling in this market with the intention to repurchase means you’re almost certainly signing up
for a higher interest rate on your next loan. Interest rates are at a 20-year high. Many of us
have short memories, but the last time the 30-year fixed rate was this high was April 2002 – so
if you think these are record-breaking rates, think again.

But that doesn’t mean you shouldn’t sell.

There are circumstances when selling could be prudent, such as when you:

1. Outgrow Your Space.

If your family has expanded, sometimes the best option is to move and find a home that
better fits your changing needs. If your walls are closing in, selling during today’s climate
might be the right decision.

2. Need to Change Locations.

If you have to move to a new area, whether for a new job or for other personal reasons,
it probably makes more sense to sell than to rent out your current property.

3. Found a Great Deal on a New Home.

Have you found a great deal on a new home that beats your current one? To make the
purchase work, you might have to sell your current house to benefit from a lower purchase price.

While selling and buying in a high interest rate market means your new interest rate is
considerably higher, there is hope. When interest rates drop back down, as they have
historically done, you can refinance into better terms when rates drop back down.

Fortunately, just because your new interest rate is higher at purchase, it doesn’t mean it will be for the next 30 years.

Why Wouldn’t You Sell?

If financial considerations are your top priority, then staying in your home might be the right
decision for you. While interest rates will eventually drop, most economists agree that the days
of 3% interest rates won’t be back anytime soon. Maintaining a predictable and stable living
situation and financial expenditure in uncertain economic times can be more important than
moving to a more comfortable living situation.

Other reasons for not selling could be an emotional attachment to your home or if you plan to
pass on the asset to your heirs.

Become an Investor

If you want to move, or if you want to take advantage of current low prices before they
skyrocket when interest rates stop, then it’s time to consider becoming a real estate investor.
If you want to move, you can keep your current property as a rental property and purchase a
new home. On the other hand, for those who don’t want to move, now is actually a fantastic
time to snatch up an investment.

High interest rates have put a damper on buyer demand and caused real estate price growth to
pause. However, once interest rates drop back down, prices will begin climbing again as buyers
flood the market.

So, what is the right decision for you? Reach out to me so we can discuss your options and
whether it’s best for you to sell, stay, or invest!