Is it Time to Double Down on a Mortgage?

Dear Dr. Don,

It has been interesting to watch the improvement in the housing market. We recently refinanced the mortgage on our house with a 15-year loan at 2.75%. We want to move to a new place in the next couple of years. But now we're facing a bit of a dilemma. One wonders where interest rates will be when we're ready to move. Can we move without selling our home? Would all of that make good financial sense?

Thank you,

-Mira Maison

Dear Mira,

No one really knows where interest rates or even housing prices will be two to three years from now. But, the odds are that both mortgage interest rates and home prices will be higher. Mortgage rates have been on the rise this year.

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Ask yourself about specific goals involved with moving to a new home while keeping the current one. What's the driving force behind the move, and why do you want to keep the house?

The typical homeowner has most of their net worth invested in real estate. Doubling down on real estate by owning two homes may not make financial sense. You have to decide whether you want to take on that risk. What are the worst-case and best-case scenarios?

On the other hand, if you're looking to trade up, you could make an argument that there's no time like the present to do it. If it worked out that you could avoid several years' worth of home price appreciation on the larger house along with the expected increase in interest rates, that would be good for you.


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