Hi there,

If you purchased a home in the last 2-4 years, then you most likely secured a nice 5 years fixed mortgage rate that is somewhere in the 2% range. This means you likely have a few years left before your mortgage rate is up for renewal. The nice thing about this is that you can sit comfortable in your current home for another few years knowing exactly what your monthly payments are going to be and can ride out the crazy interest rates that are out there right now.

You might be thinking that by the time your mortgage term is up the rates will be back down and you can make your next move.

Here is the problem, once rates come back down, prices will go back up! So it will cost you a lot more if you are upsizing, even if you sell your home for more money! It is way better to upsize in a down market because once the market turns you can capitalize on the more expensive homes appreciation. (20 % increase on 700k is more money then 20% on a 500k home. )

Since the mortgage rates are currently high that means that home prices are lower!

So here is how you can take advantage of this. You do so by Blending your mortgage!

This is how it works.

Example

Lets say you have 2.5 years left on your current mortgage that is at 2.2%, with about 250k remaining on that mortgage.  Like most your home has appreciated it will sell for about 550k. So you have 300k in equity.

You want to purchase a home that is 150k more then the 550k your home sold for. So 700k, So you need an additional 150k mortgage.

So your new mortgage amount will be the 250k remaining on your current home plus 150k on the new home. 400k Total.

Your lender will offer to blend the old mortgage rate 2.2% on the 250k with the current 4.5% rate on the 150k for a new total rate of around 3% (it airs to the lower side because the lower mortgage rate is more money then the new one 250k>150k)

In this example your mortgage would only increase about 500 bucks a month as opposed to an additional 1000 dollars a month.  

So you are able to upgrade your quality of living , move into a bigger home, take advantage of the current low prices and still secure a low mortgage rate for atleast whatever time is remaining on your mortgage term.

So now when your term is up in a few years and if all goes as planned and rates are back down then you will have capitalized on the price appreciation of the more expensive home you purchased because as we know low rates increase prices!

If you would like to discuss this more, please reach out to me!