Should You Sell Your Home If You Have a 3% Mortgage Rate?

September 24, 2025 Denver, CO

With current rates hovering near 7%, selling a home means giving up a historically low rate and taking on a significantly higher monthly payment. At Westerra Credit Union, we understand the hesitation to take this step, and we’re here to help you weigh the pros and cons of selling in today’s market.

The Lock-In Effect

Many homeowners are experiencing what’s known as the “lock-in effect.” This refers to the reluctance to sell a home because the homeowner’s current mortgage rate is far lower than what is available today. It is a valid concern. A 3% mortgage rate is a financial advantage that can be hard to let go of, especially when it impacts affordability and long-term planning.

Reasons You Might Still Consider Selling

While keeping a low mortgage rate is appealing, there are situations where selling may still make sense:

• Your lifestyle has changed. If your current home no longer fits your needs due to family growth, relocation, or accessibility, moving may be necessary.

• You have built significant equity. Selling could unlock funds that can be used for a larger down payment, debt reduction, or investment in a new property.

• You are ready to upgrade or downsize. Whether you want more space or less maintenance, your home should support your goals.

What You Give Up If You Sell

Selling a home with a 3% mortgage rate means taking on a new loan at a higher rate. This could result in:

• Higher monthly payments

• Reduced buying power

• Longer loan terms or higher total interest paid

It is important to run the numbers and understand how a new mortgage would impact your budget.

Alternatives to Selling

If you are not ready to give up your low rate, consider these options:

• Rent out your current home. This allows you to keep your mortgage and generate income while exploring other living arrangements.

• Use a home equity loan (HELOC). Tap into your equity for renovations or debt consolidation without refinancing your entire mortgage.

• Wait and watch. If your move is not urgent, monitor the market and interest rate trends. Timing can make a big difference.

Making the Right Decision

There is no one-size-fits-all answer. The decision to sell should be based on your personal goals, financial situation, and long-term plans. At Westerra Credit Union, our mortgage specialists are here to help you explore your options, understand your numbers, and make a decision that supports your future.

Visit westerracu.com/borrowing/mortgage to learn more, or schedule a consultation today.