Why keeping your 2% or 3% mortgage rate might not always be the smartest financial decision.

If you purchased or refinanced your home a few years ago, there's a good chance you're enjoying a mortgage interest rate that today's homebuyers can only dream about.

Maybe your rate is 2.75%, 2.875%, or somewhere around 3%. That's a great rate, especially compared to the higher rates we've seen in recent years.

But what happens when you're ready for something different?

Perhaps you need a larger home, want to downsize, relocate, or simply move closer to family. You may find yourself asking:

Should I sell my current home, or should I keep it as a rental so I don't lose my low mortgage rate?

It's a question many homeowners are facing, especially here in the Phoenix Metro and West Valley.

The answer might surprise you.

A Low Mortgage Rate Doesn't Always Mean You're Saving Money

Let's look at a simple example.

Imagine you own a home worth $520,000. You still owe approximately $217,000 on your mortgage, and your interest rate is an incredible 2.875%.

Now you've found your next home, priced at $650,000.

You have two options: sell your current home and use the equity toward your next purchase, or keep your current home and turn it into a rental property.

Both options have advantages, but the financial picture can look very different.

Option 1: Sell Your Home and Use Your Equity

If you sell your current home for $520,000, pay off your existing mortgage, and account for an estimated 7% in total selling expenses, you could walk away with approximately $267,000.

That's money you can put toward your next home.

On a $650,000 purchase, that would leave you needing a mortgage of approximately $383,000, assuming you use all those proceeds as your down payment and pay any additional purchase expenses separately.

That's a substantial down payment!

Not only would you be borrowing less money, but with more than 20% down, you generally wouldn't need private mortgage insurance on a conventional loan.

The result? A smaller mortgage and potentially a more manageable monthly payment.

Option 2: Keep Your Home and Rent It Out

Now let's consider the other option.

You decide to keep your current home because you don't want to give up that wonderful 2.875% mortgage rate.

You plan to rent it out, allowing a tenant to help cover your existing mortgage.

Sounds like a smart move, right?

It certainly can be, but there's something important to consider.

The approximately $267,000 you could have received from selling your home is still tied up in that property.

Unless you have other savings or borrow against your equity, that money isn't available to help purchase your next home.

Let's assume you have enough separate savings to put 12% down on the new $650,000 home.

Your new mortgage would be approximately $572,000.

Compare that with the roughly $383,000 mortgage you would have needed if you sold your existing home.

That's nearly $189,000 more in borrowed money, at a much higher interest rate.

And because you're putting less than 20% down, you would typically need to pay private mortgage insurance as well.

Suddenly, keeping that low interest rate on your old home may not look quite as appealing.

What About the Rental Income?

This is where many homeowners see an opportunity.

If your current home can generate rental income, you may be able to offset some or all of the expenses associated with keeping it.

But remember, rental income isn't the same as profit.

As a landlord, you're still responsible for expenses such as:

• Mortgage payments, property taxes, and insurance

• Maintenance and unexpected repairs

• HOA fees, when applicable

• Property management expenses

• Periods when the property may sit vacant

You'll also want to consider whether the rental income is enough to justify the additional money you're borrowing for your new home.

There are potential long-term benefits, too. Your tenant may help pay down your existing mortgage, and your property could increase in value over time.

However, appreciation isn't guaranteed, and property values can decline.

The important question isn't simply, "Can I rent my home?"

It's "Does keeping this home make financial sense when I look at the bigger picture?"

What If Home Values Change?

Real estate is a long-term investment, and market conditions matter.

If home values continue to rise, keeping your property could be beneficial. You may build additional equity while receiving rental income.

But what if home prices remain flat or decline?

You could find yourself paying more interest on your new mortgage while also carrying the responsibilities and expenses of a rental property that isn't increasing in value.

For some homeowners, keeping the property may still be the better choice. For others, selling and using their equity toward the next home could create greater financial flexibility.

That's why there isn't a one-size-fits-all answer.

The Bottom Line: Don't Let Your Mortgage Rate Make the Decision for You

I understand why homeowners are reluctant to give up a 2% or 3% mortgage rate. Those rates are difficult to replace, and there's certainly value in keeping one.

But your mortgage rate is only one piece of your overall financial picture.

The equity you've built in your home is valuable, too.

Sometimes selling and using that equity toward your next purchase can reduce your new mortgage balance, lower your monthly expenses, and provide greater financial flexibility.

Other times, keeping your current home as a rental may be a wonderful long-term investment.

The right decision depends on your goals, your finances, and what makes the most sense for your future.

Thinking About Making a Move in the Phoenix Metro or West Valley?

If you've been thinking about selling your home but feel hesitant because of your current mortgage rate, you're certainly not alone.

Whether you're considering a move in Surprise, Peoria, Glendale, Sun City, Sun City West, Buckeye, or the surrounding West Valley communities, understanding your home's value and available equity is a great place to start.

At The Ellen Baker Team with Realty ONE Group, we believe real estate should be about helping people make informed decisions, not pressuring them into buying or selling.

We'd be happy to help you explore your options, review your home's potential market value, and discuss what your next move could look like.

Sometimes the smartest move isn't about keeping the lowest interest rate. It's about making the best decision for your future.

Ellen Baker & Orlando Diaz
The Ellen Baker Team | Realty ONE Group
Serving Phoenix Metro and the West Valley
Hablamos Español

Disclaimer: The figures used in this article are hypothetical examples for educational purposes. The 7.24% mortgage rate is a historical illustration, not a current rate quote. Actual mortgage rates, closing costs, property values, rental income, financing requirements, and financial outcomes will vary. Consult a qualified mortgage lender, tax professional, or financial advisor before making a financial decision.

What is the Mysterious Orange Wine?

Orange wine is actually made from white grape varietals sourced from Italy such as sauvignon vert, ribolla gialla, and pinot grigio. Traditionally these varietals would be fermented in stainless steel tanks or oak casks after having the skins and stems removed. In the case orange wine, the grapes are left to ferment with the grape skins left on the grape pulp.

Wine gains most of its color from the skin of the grape. Grape juice will extract color from the grape skins. By fermenting the grapes with the skin on, the wine will take on an orange hue.

Several orange wines are available at stores such as Total Wine & More. Most wines available in the American market are made from pinot grigio and are priced reasonably under $30 per bottle. Producers include Podari Di Carlo, Praruar, and Romato. Food pairings with orange wine include roasted or grilled meats such as chicken and pork, Thai spiced foods, seafood and umami rich dishes. 

Article courtesy of: Jim Baker

The Ellen Baker Team at Realty One Group, has put together an elegant menu designed to spoil that special someone in your life—perfect for creating a memorable and heartfelt evening together.

 Menu

• Pan-Seared Filet Mignon with Red Wine Reduction

• Garlic Butter Mashed Potatoes

• Roasted Asparagus with Lemon

• Chocolate-Dipped Strawberries

 Main Course: Pan-Seared Filet Mignon

Serves 2

Ingredients

• 2 filet mignon steaks (6–8 oz each)

• Salt & freshly ground black pepper

• 1 tbsp olive oil

• 2 tbsp butter

• 2 cloves garlic, smashed

• 1 sprig fresh rosemary or thyme

Instructions

1. Let steaks rest at room temperature for 20–30 minutes. Season generously with salt and pepper.

2. Heat olive oil in a skillet over medium-high heat.

3. Sear steaks for 3–4 minutes per side.

4. Add butter, garlic, and herbs. Spoon the melted butter over the steaks for 1–2 minutes.

5. Remove from heat and let rest before serving.

 Red Wine Reduction Sauce

Ingredients

• ½ cup red wine

• 1 small shallot, finely chopped

• 1 tbsp butter

Instructions

1. In the same pan, sauté shallots until soft.

2. Add red wine and simmer until reduced by half.

3. Finish with butter and drizzle over steaks.

 Garlic Butter Mashed Potatoes

Ingredients

• 2 large russet potatoes

• 2 tbsp butter

• ¼ cup warm cream or milk

• 1 clove garlic, minced

• Salt to taste

Instructions

1. Boil potatoes until fork-tender.

2. Mash with butter, garlic, and warm cream.

3. Season and keep warm.

 Roasted Asparagus with Lemon

Ingredients

• 1 bunch asparagus

• Olive oil, salt & pepper

• Lemon zest

Instructions

1. Toss asparagus with olive oil, salt, and pepper.

2. Roast at 400°F for 12–15 minutes.

3. Finish with fresh lemon zest.

 Dessert: Chocolate-Dipped Strawberries

Ingredients

• Fresh strawberries

• 1 cup semi-sweet chocolate chips

Instructions

1. Melt chocolate gently.

2. Dip strawberries and place on parchment paper.

3. Chill until set.

 Romantic Touches for the Evening

• Soft background music

• Candlelight or warm ambient lighting

• A simple table setting with cloth napkins

• A handwritten note or card

Wishing you a loved-filled evening!
Your local real estate team.

Ellen Baker Team AZ 
Ellen Baker: 623-670-0804
Orlando Diaz: 623-262-2642

If you’ve been considering selling your home, now may be an excellent time to take advantage of current market conditions—especially with Spring Training Cactus League season right around the corner. Each year, baseball fans and enthusiasts from across the country flock to the Valley of the Sun to enjoy the games, our beautiful communities, and Arizona’s warm winter weather.

This seasonal influx brings increased activity and visibility to the local real estate market. Many visitors fall in love with the lifestyle and begin exploring opportunities to purchase a primary residence, second home, or investment property. As a result, sellers often benefit from a broader pool of motivated buyers during this time of year.

In addition, buyer confidence is improving as interest rates have recently settled near 5.6%, depending on the lender and loan type. This has encouraged more buyers to re-enter the market and take advantage of today’s opportunities before competition increases later in the year.

With strong seasonal demand, favorable weather for showings, and renewed buyer interest, Spring Training season can be an ideal window to showcase your home. Proper pricing, strategic marketing, and professional guidance can help position your property to stand out and attract serious buyers.

If you’re curious about your home’s value or would like to discuss the best timing and strategy for selling, contact The Ellen Baker Team today! We are happy to help. Planning ahead now can put you in a strong position for a successful sale.

Ellen Baker: 623-670-0804

Orlando Diaz: 623-262-2642