How To Keep Your Low Mortgage Rate When Moving

Have you ever felt stuck in your home because your mortgage rate is much lower than today’s rates? Many people in the U.S. are in the same situation. If you locked in a rate around 3% or 4% in recent years, moving now can feel expensive. Selling your home could mean giving up that low rate and taking on a new mortgage at 6% or higher.

This keeps people from moving, which lowers the number of homes for sale. But there’s a new idea called a portable mortgage that could help.

What is a portable mortgage? A portable mortgage lets you take your current mortgage with you when you move. That means you can keep:

• Your low interest rate
• Your remaining balance

Instead of paying off your old mortgage and starting a new one at higher rates, you carry it to your new home. This could make more people willing to sell, helping the housing market move.

Who benefits and who doesn’t. From my perspective, the people who would benefit most are homeowners with low rates who want to move. Whether you’re upgrading, downsizing, or relocating, you could keep your rate and avoid the higher payments that come with a new mortgage.

However, renters and first-time buyers wouldn’t benefit directly. They don’t have a low-rate mortgage to carry forward. Also, if your new home is much more expensive than your current one, you might still need to cover the difference between your old mortgage balance and the price of the new property.

Challenges to keep in mind. There are several challenges with portable mortgages:

• Investor rules: Most mortgages are sold to investors and are expected to be paid off when a home is sold. Moving a mortgage changes the rules and could raise interest rates for new borrowers.
• Legal and logistical issues: Mortgages are tied to a specific home, including titles, taxes, and escrow. Moving a mortgage can get complicated legally.
• Affordability concerns: Homeowners with low rates might outbid others, pushing up prices, while those without low rates could be left behind.

What this means for you. If you already have a low-rate mortgage and are thinking about moving, a portable mortgage could help you keep your rate rather than starting over at a higher one.

You would still need to:

• Meet your lender’s affordability rules
• Cover any extra cost if your new home is more expensive

If you’re a first-time buyer or renter, portable mortgages don’t help directly. The idea is still under review, and rules need to change before it’s widely available.

From what I see, a portable mortgage could unlock movement in the housing market and give homeowners a way to move without losing their low interest rate. But it’s not a perfect solution. First-time buyers and renters may not benefit, and there are many challenges to work through.

If you’re thinking about moving and already have a low-rate mortgage, keep an eye on this idea and talk to your lender. It could make a big difference for your next home.

And if you have questions about portable mortgages, buying a new home, or need guidance on your next real estate move, feel free to reach out to me at (830) 377-0904, or email me at traci@legacybrokergroup.com. I’m happy to help you understand your options and make the best decisions for your situation.