By Brandy Branstetter, CFP®
For wealth-building professionals who purchased or refinanced their homes between 2020 and 2022, having a near 3% mortgage rate today may feel like you outsmarted the bank. You may also be thinking you ought to “stay put” and preserve your windfall rate as long as you can.
But is that the right way to think about this low interest rate? Is holding on to your low mortgage rate affecting a life transition that could mean an upgrade in family lifestyle, better schools, or more quality time with your loved ones creating lifetime memories?
Having such a low mortgage rate can be a source of intense financial pride and stability. During the early 2020s, borrowing costs dropped to historic lows, creating a massive wave of “smart,” affordable home loans (which you took advantage of), and you may be reluctant to give it up to move your home elsewhere. The truth, however, is that a mortgage interest rate is only one of many inputs to a solid and working financial plan, alongside cash flow, lifestyle fit, and having the flexibility for opportunities that may arise.
The Lock-in Effect
As mortgage rates have roughly doubled today from those lows, that formerly great financial win may have morphed into a significant, silent lifestyle constraint. This phenomenon, often called the “lock-in effect,” could be trapping you in a home that no longer meets your needs, causing you to sacrifice lifestyle flexibility, comfort, and professional opportunities—just to keep that low monthly payment. Giving up that low rate feels like you’d be making a bad decision.
Staying in your home, however, might create unnoticed hidden costs: longer commutes (and all the aggravation and lost time), a home that no longer fits your growing family, changing needs, and other delayed life transitions. The point here is that smart financial decisions should be based upon a balance of the “numbers” and a quality of life, not just interest rates.
Affordability Is About Cash Flow, Not What the Bank Approves
Lenders qualify buyers using gross income, but real life runs on net take-home pay. Beyond Wealth recommends keeping total housing costs at 25-30% of net monthly income. Taking a close look at how a new mortgage (to upgrade your home, for example) would affect your budget flexibility, or adding to a Future Opportunity Fund, is essential to reducing financial stress, especially during challenging periods or income changes.
As an example, if your take-home cash flow is $14,000/month, 25-30% is $3,500 – $4,200 for total housing costs. Depending upon your other expenses and allocations, this gives you a rough guideline as to what may be possible (or may have to wait) for housing upgrades while still keeping your cash flows to other goals intact.
To illustrate, let’s say the rate was 2.78%. After modeling the move, we might show that, even though the payment for purchasing a larger house in another location increased $1,000/month or more, the increase was workable within our guidelines and saved the client 50 minutes of daily commuting—reclaiming 200+ hours per year that could be spent with family or other endeavors.
If you think about it, that extra $12,000/year would equate to $60/hour.
Isn’t an extra hour with your family worth $60?
Remember also that housing costs not only include mortgage payments, but potentially new insurance premiums, HOA costs and other expenses that may come with a housing change.
The key here is understanding that a comfortable payment should be viewed as freedom to pursue life’s aspirations, not a limitation. It’s reframing your mindset that a mortgage is just a tool to achieve your objectives. If a 6.5-7% interest rate mortgage fits your net cash flow comfortably and also allows you the financial bandwidth to pursue life’s aspirations, then it shouldn’t matter what your former rate was. Your legacy will be how well you lived your life, not an old mortgage statement showing a low 2021 interest rate expense.
Key Point: Affordability is a strategy for long-term wealth, not a limitation.
Your Home Is Your Castle to Support Your Life, Not Delay It
How many times have you heard a friend or colleague say, “We’re just waiting for rates to come down, then we’ll start looking for the house we want”?
Life’s changes and opportunities don’t wait on interest rates or what the Federal Reserve will do; they happen. Growing families, graduating children leaving home to forge their own future, career shifts, and a desire to relocate to warmer climates are all examples of life transitions that should not be reined in by what rates might or might not do in the future.
A young family may want a home in another town with better schools, an older couple may want a smaller house with less maintenance (and where the net mortgage payment would be the same), or a move closer to a growing city may allow for greater career advancement or lifestyle upgrades for your family. None of these should be constrained by immaterial factors such as interest rates. In our experience counseling professionals and business owners, staying focused on the bigger picture and what really matters is a smarter strategy.
Key Point: Like many financial concepts, interest rates, amortization schedules and financing arrangements should be viewed as tools, not shackles, to what’s really important in your life.
The Psychological Burden
The phrase “lock-in effect” is fitting. It suggests that while you are financially comfortable (the gold), you are not free to move. This creates a mental, cognitive load. Every time such a homeowner thinks about moving, they face the reality of current market rates.
This leads to another psychological phenomenon known as the “endowment effect”—the tendency to overvalue what you already have. A homeowner might be unhappy in their current home, but the thought of losing their 3% rate feels like a massive loss, leading to paralysis and continued residence in a home that no longer suits their needs.
In reality, it’s about the erosion of choice. Choice means freedom. Choice means opting for what’s really important and precious to your life. Will it be the fact that you had that 3% mortgage interest rate for decades or that you and your family were able to live your life on your terms, by your choice?
At Beyond Wealth, we help clients with these important considerations, reframing questions and concepts to align financial decisions (such as housing) with life goals, aspirations, and those ideals that are truly important now and in your family’s future, not market headlines.
Your Guide Toward Financial Freedom and a Lasting Legacy
At Beyond Wealth, we focus on the most efficient strategies to help you realize your objectives and life aspirations. Our independent advisory firm offers an array of services—focused on our clients—to help pursue a confident financial future.
As fiduciary advisors, our goal is aligned with yours: Connect your wealth to your life’s objectives and empower you to choose and follow the financial road that feels right for you and your family.
Are you ready to take charge of your financial future? Give us a call (913) 871-7980 or email brandy@beyond-wealth.com to schedule an introductory meeting and start this year on a better financial path toward your own vision.
Frequently Asked Questions
Should I move if I have a low mortgage rate?
A low mortgage rate can make moving feel financially risky, but it shouldn’t be the only factor in your decision. If your home no longer fits your lifestyle, career needs, or long-term goals, staying put solely because of your rate may cost you flexibility and quality of life. Our team at Beyond Wealth helps clients weigh housing decisions alongside cash flow, taxes, investments, and long-term planning to determine whether keeping or leaving a low-rate mortgage truly makes sense.
Is it a financial mistake to give up a 3% mortgage?
Not necessarily. While today’s higher rates can increase monthly payments, the true financial impact depends on more than interest alone. Opportunity costs (such as delayed career moves, longer commutes, or postponing life changes) can outweigh the benefit of keeping a low rate. Many homeowners find that when they evaluate the full picture, giving up a 3% mortgage is not the financial mistake it’s often made out to be.
How do I decide whether to stay or move when mortgage rates are high?
The decision should be based on how the move affects your overall financial plan, not just your loan terms. This includes evaluating equity, future earning potential, lifestyle priorities, tax implications, and long-term goals. At Beyond Wealth, we work with clients to model both scenarios—staying versus moving—so the choice is grounded in clarity rather than fear of higher rates.
About Brandy
Brandy Branstetter, CFP® is Principal & Wealth Advisor at Beyond Wealth, a fiduciary financial advisory firm based in Overland Park, Kansas. Beyond Wealth is dedicated to empowering clients to make confident and meaningful financial decisions. Specializing in helping mid-career professionals and business owners navigate their work-optional lifestyle, the firm provides personalized comprehensive wealth management services to the Kansas City metro area and beyond.
Brandy’s approach is collaborative and values-driven, helping clients pursue financial independence while aligning their plans with their unique goals and aspirations. She began her financial career in 2005 and became an advisor in 2012. Throughout her journey, she noticed a disconnect in how many firms communicated with female clients, inspiring her to establish a practice focused on genuinely engaging and supporting women in their financial journeys. In 2012, she co-founded Beyond Wealth with a mission to provide clients—especially female professionals and entrepreneurs—the guidance needed to navigate their financial complexities. Together with her business partner, Andrew, Brandy developed the “Good, Better, Best” financial planning framework to deliver tailored strategies that help clients achieve meaningful progress towards their financial aspirations.
Brandy earned a BSBA in Finance from the University of Tulsa and holds the CERTIFIED FINANCIAL PLANNER® designation. Outside of work, she enjoys spending time with her husband, Jon, and their two children, Alexa and Ethan. In their downtime, they love golfing, exploring new vacation spots, and attending live events—everything from rock concerts to Broadway musicals. A dedicated sports enthusiast, Brandy especially enjoys watching Oklahoma Sooner football and cheering on the Kansas City Chiefs. With a lifelong dream of living by the beach, she’s always planning her family’s next big adventure. To learn more about Brandy, connect with her on LinkedIn.
