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  • Writer's picturekellyzrealtor

What to Do with Your Low Interest Rate

If you scored one of the historically low interest rates on a mortgage from 2020-2022, you probably feel like you should hold onto it. Many homeowners are in the same situation and feel like they can’t upgrade their home and move because their interest rate is too good to let go. 


But you don’t have to give up your low interest rate to get into a new home! 


In fact, you can play this scenario out in a way that will allow you to become a real estate investor and build your wealth. Here’s how to put that low interest rate to good use while also upgrading to a new home. 


The idea is to keep your original mortgage and rate, turn your first home into a rental, and then buy a new home. 


To do this, you’ll pull the equity out of your current home with something like a home equity loan. Your lender will be able to help you find the best option for how to tap into your equity. Then, with the equity you pull out, you’ll be able to put a down payment on a second home. 


In the negotiation stages of buying the new home, you can take advantage of sellers with high equity and ask for an interest rate buydown. The buyers will buy your interest rate down by a certain number of percentage points, giving you a lower interest rate on your new mortgage.


You’ll then move into your new home and turn your first home into a rental. Turning your home into a rental will provide passive income that will cover all of your mortgage and maintenance costs along with profit that can go towards your new home’s mortgage payment. 


This will allow you to build equity back up in your first home and your second home, all while keeping that low, low interest rate. 


Using this plan will help you retain your original interest rate while also becoming a real estate investor and building equity in two homes at the same time, creating a way for you to build wealth quickly.

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