Why the current mortgage dilemma is a bigger problem than most think!

If you have a really low mortgage rate on your home right now, but you want to buy another home, there needs to be some sort of justification, for giving up the historic, low-interest rate to go into a higher-priced mortgage,  here are some things consumers have to weigh out as a relates to making a move in this environment…

Homeowners who advantage of historically low-interest rates in the last three years. Those low-interest rates don’t make it an extremely attractive proposition for you to buy a new home when your current rate is 3% and the mortgage rate on the new house you want to buy is 6.5%.

Let’s say your mortgage payment is $2500 a month and you want to buy a new house for $700,000. The new house is at $700,000, even if you sell your home and put in all of the equity from your departure home into the new home, you’re still going to be paying a substantially higher mortgage payment, even with 300k down. It’s realistic that in a situation like this, your new mortgage payment might be somewhere around maybe $4500 a month to account for the higher purchase price and account for the higher interest rate.

So you’re going up in payment of $2500. Can you do it? Maybe you should do it well that’s a different situation altogether. If you’re going to go up in mortgage payment, your income needs to be higher as well too, or the new house has to be such a good opportunity in terms of maybe the house has a granny unit, or there’s another unit on the home for example, that you can rent out to the mortgage payment while it is more, it could be offset the payment,

Maybe the new house is in alignment with being more equidistant to your job or closer to your kids or their school. It ought to be a situation in which buying the new house makes sense to justify taking on an extra $2k+ a month. The point is to have a plan. So let’s say you have consumer debt i.e. credit cards phones etc. One justification that you could make would be to pay off this consumer debt, which will radically lower your payment which then could be parlayed into making a justification for a higher mortgage payment. The house has to be such a good opportunity to make the justification for going into a pricier loan. This is also why some families choose to not buy a home and decide to cash out instead because if you cash out your real estate taxes stay the same and you can still upgrade the home and you don’t have to go through, the home buying process, let alone having to pay potentially higher property taxes as a result of buying a more expensive home.

The other option is to wait it out. This is what many families across the United States right now are doing because they can’t make the justification to change to a higher interest rate and who can blame them? This situation most likely is temporary and will evolve into something in the future to what however, no one knows it is projected long-term mortgage rates will come down. When interest rates come down more people will have more home equity and more buyers will emerge creating more bidding wars. So if you want to get a fair price home, despite interest rates being high 2023 might be the right time to do it if you can bite off the discomfort in the changing of payment and changing of interest rate.

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When buying a home, it’s natural to want the lowest mortgage rate possible. But sometimes, chasing a slightly better rate from another lender—especially after your offer has already been accepted—can backfire in a big way. Let’s walk through a real-world scenario. You’ve got an offer accepted on a house. You’re working with a lender who has you approved, documents in underwriting, and a 21-day close of escrow in place. Everything is moving forward. Then you hear from another lender offering a rate that’s 0.25% lower, with slightly better closing costs. It’s tempting. But before you make a jump, here’s what you need to consider. Switching Lenders Comes with Time Costs When you pivot to a new lender mid-contract, they’ll need to: Re-underwrite your entire loan, Order a new appraisal, Disclose and sign new loan documents, Submit the file for final loan approval, Schedule and fund closing—all over again. This doesn’t happen overnight. Even in ideal circumstances, the new lender is likely going to need at least 25–30 days to close. If you’re in a fast-moving or competitive market, this is a real problem. Most sellers won’t grant a contract extension just because you’re switching lenders. So, what happens next? A Contract Extension Can Jeopardize Your Deal Asking for a contract extension means the seller must agree to delay closing. But that delay introduces risk—especially if the seller has backup offers or simply wants certainty. They may not grant the extension. Or worse, they could cancel the deal outright and take another buyer’s offer. Even if the seller agrees to extend, your earnest money and negotiation power could take a hit. And for what? A slightly lower rate that might save you $50 to $75 a month? Mortgage Rates Aren’t as Far Apart as You Think Here’s the truth: all mortgage lenders get their money from the same place—the bond market. The pricing differences between lenders usually range from 0.125% to 0.25% in rate on any given day. If one lender seems to be offering dramatically better pricing, the first thing you should ask is: How? Head over to FreddieMac.com and check the average 30-year fixed rate posted weekly. This is one of the most reliable benchmarks for where rates truly stand in the market. If a lender is quoting you a rate that’s well below that average, ask for the details: Are they charging extra points? Is this a teaser rate with a prepayment penalty? Is it based on a different loan product or risky structure? Often, what sounds “too good to be true”… is. Consider the Bigger Picture Think long-term. If you’re financing $600,000, a 0.25% lower rate may reduce your payment by roughly $75/month. But what if you lose the house and have to start over? That monthly savings doesn’t mean much if you’re outbid on your dream home or lose your deposit. Also, remember: you’re not going to keep this rate forever. Today’s homebuyers typically refinance when rates drop by about 0.75% or more. So if rates fall within the next year or two, you’ll likely be refinancing anyway. Instead of paying extra points now or risking the entire deal for a minor monthly savings, it may be better to accept a slightly higher rate—knowing you’ll refinance when the time is right. The Real Risk Isn’t the Rate—It’s the Delay When shopping for a home loan, don’t just ask, “What’s your rate?” Ask: Can you close on time? Is this rate sustainable or based on hidden costs? Will switching lenders delay or jeopardize my contract? A home purchase contract is a binding agreement between you and the seller to perform within a set timeframe. If you can’t meet those dates because you're chasing a slightly better rate elsewhere, you may want to reconsider if now is the right time to buy. Final Thoughts Yes, interest rates matter. But execution matters more. Before making a switch mid-transaction, talk to your lender. Have an honest conversation about pricing, timelines, and strategy. You might find that staying the course, securing the house, and planning to refinance later offers a better path to financial security. Want to Know Your Options? Let’s compare rates and strategies the smart way—without risking your dream home. 👉 Click here to get a custom rate quote today.

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