Why Holding on to your Low Interest Rate could be costing you more

Why Clinging to Your Low Mortgage Rate Could Be Costing You More Than You Think

If you bought or refinanced your home a few years ago, chances are you locked in a mortgage rate that makes today’s rates look steep. Many homeowners are holding onto those loans for dear life — and on the surface, that makes sense. Why give up a 3% rate for a 6% one?

But here’s the twist: your “cheap” mortgage could be costing you thousands every year if you’re also carrying high-interest debt elsewhere.

The Equity You’re Sitting On Could Be Working Harder

Over the past few years, home values in Colorado, Wyoming, and Florida have seen big gains. That means you’ve likely built substantial equity — the difference between your home’s market value and what you owe on your mortgage.

Instead of letting that equity just sit there, you can put it to work by:

• Refinancing your mortgage to consolidate other debts.

• Selling your current home and purchasing a new one, using the equity to reduce or eliminate other financial burdens.

Either move can free up hundreds (or even thousands) per month in cash flow, and in many cases, slash the total interest you’re paying over time.

The “Low Rate” Trap

Let’s put it into perspective:

• You have a $300,000 mortgage at 3% — great rate, right?

• But you also have $50,000 in credit card debt at 20% APR and maybe $30,000 in car loans at 7% APR.

• Even if you keep your 3% mortgage, you’re losing big on the other debts because their interest rates are eating you alive.

If you refinance into a higher mortgage rate but roll all that debt into your home loan, the blended effect could mean lower overall interest costs and a much smaller monthly payment.

Real Numbers, Real Impact

Here’s a simplified example:

Current situation:

• Mortgage: $300,000 @ 3% = $1,265/month (principal & interest)

• Credit cards: $50,000 @ 20% = $1,000+/month (minimums)

• Auto loans: $30,000 @ 7% = $450/month

• Total monthly: $2,715+

• Interest paid over time: astronomical on the credit cards alone

Refinance scenario:

• New mortgage: $380,000 @ 6.5% = $2,400/month (principal & interest, 30 years)

• No more credit card or auto loan payments.

• Total monthly: $2,400 — savings of $315+/month

• You’re now paying one interest rate, and it’s far lower than the double-digit rates you were on before.

And that’s not counting the stress relief of simplifying your finances into a single payment.

Why Selling and Buying Might Make Sense

If refinancing doesn’t fit your long-term goals, another option is selling your current home, using your equity to pay off debts, and purchasing a new property that aligns with your financial priorities.

In high-demand areas like Denver, Cheyenne, and many Florida markets, sellers are often walking away with six figures in profit. That money can clear high-interest debts and fund a strong down payment on your next home, reducing your new mortgage amount and monthly payment.

The True Cost of “Cheap”

It’s easy to focus on the number in your mortgage statement, but the real cost of money is the average rate across all your debts. If your credit cards and other loans carry sky-high interest, you’re not really living in a “low interest” world — you’re living in a blended one that’s far more expensive.

Think of it like this: keeping a 3% mortgage while paying 20% on $50,000 is like refusing to sell a gas-guzzler because you got a good deal on the purchase price — you’re still bleeding money at the pump.

How to Decide If It’s Time to Act

Here’s a quick checklist to see if leveraging your equity could make sense:

• You have high-interest debt (credit cards, personal loans, auto loans).

• You’ve seen your home’s value increase significantly in the last few years.

• You want to simplify your payments into one manageable bill.

• You have long-term plans to stay in your home or are open to moving strategically.

If you check even one of these boxes, it’s worth running the numbers.

The Bottom Line

Holding onto a low mortgage rate might feel like a safe bet, but it’s not always the smartest financial move when you step back and look at your full debt picture. Whether through refinancing or selling and buying, your home’s equity could be the key to lowering your total interest costs, freeing up monthly cash flow, and setting yourself up for long-term financial stability.

It’s not about chasing a lower mortgage rate — it’s about building a lower overall cost of debt.

Next Step: If you’re in Colorado, Wyoming, or Florida, I can run a personalized analysis showing exactly how your equity could work for you. The numbers might surprise you — and they could change your financial outlook for years to come.