What Giving Up a 2.65% Mortgage Costs
There is a version of this decision that has nothing to do with houses. A friend of mine has outgrown his place, has the down payment, has the income, and has not moved in three years. He is not undecided about the house. He is undecided about the loan, and nobody has been able to tell him what the loan is worth.
So I built the thing that tells him. This is what it says.
Half the country is in the same room
Freddie Mac's weekly survey put the average 30-year fixed rate at 7.24% at the end of October 2026. The record low in that same survey, set in the first week of January 2021, was 2.65%. A lot of people signed something in between those two numbers and have been quietly rich in one specific way ever since.
Not a small number of people, either. Realtor.com's analysis of FHFA data put 49.1% of outstanding US mortgages below 4% in the second quarter of 2026, down from 52.1% a year earlier. Roughly half of American homeowners are carrying a liability they could not replace today, and the lock-in is loosening by about three points a year, which is to say barely.
Here is the whole of it on one loan. Four hundred thousand dollars, thirty years:
Same house. Same money borrowed. Four hundred thousand dollars of difference, which is to say the rate is not a detail of the purchase. On a thirty-year loan the rate is most of the purchase. If you have been feeling irrational about not moving, that is the number you were feeling.
And it is where a payment calculator stops, which is a problem, because the rate is not the only thing that changes when you move.
What a move actually does to a plan
planbend ships with three finished sample households so you can look at a real plan without typing one. The mid-career one is the Hendricks family: Marcus and Priya, 44 and 42, two kids, $163,800 of household income, North Carolina. They bought in 2019 and hold a 5.25% mortgage with $232,000 left on it. Not a 2.65% trophy, but better than today, which describes most people.
Their plan, before anybody touches it:
Now move them. Next year, at 45. Sell the $418,000 house, buy a $560,000 one in the same state, put the proceeds down, borrow the rest at today's 7.24% over thirty years. This is the Move House change on the Scenarios tab, and it is four boxes and a date.
The first thing it does is show you the sale, which is the part people do in their heads and get wrong:
Two things in there are worth sitting with. The $25,080 of selling costs is real money that never appears in the monthly payment you have been comparing. Dedicated home-sale calculators do price it — several mortgage lenders publish one, and they will tell you your net proceeds to the dollar. What none of them do is carry that number forward into the rest of your life. And the gain is $32,920 against a $500,000 exclusion, so the tax is zero — which is the common case, and worth knowing because a lot of people put off a move over a tax bill they would never have owed.
Then the part the household actually asked about:
Monthly, it spends the household’s entire margin and then some — every dollar of the $343 they had spare, and $616 more. That is the answer to "can we afford it", and the answer is no, not at this price: a household running $616 a month behind is not one boiler away from trouble, it is already in it. By the end of the plan it costs $1,022,332 of investment portfolio, in exchange for $142,000 more house.
You can argue with that trade. You cannot argue with it before you have seen it, and before I built this the only way to see it was to not see it.
The move I did not expect
Then I ran the lateral one. Same household, same date, same 7.24% — but a $418,000 house instead of a $560,000 one. A different house at the same price, which is what a lot of moves actually are. Better school catchment, closer to a parent, away from a road that got busy.
The monthly budget gets better by $106. A smaller loan at a worse rate, and a fresh property tax assessment, land slightly on the household's side. If the monthly number is the one you are watching, this move is free.
It costs $549,036.
Where it goes is not mysterious once you look: $25,080 of selling costs and $6,000 of moving, out of the plan at 45, never compounding again. Thirty-one thousand dollars, forty-seven years, call it 6% a year. That is most of the half million. The rest is the amortisation clock going back to year one, so a household seven years into paying down principal starts again paying down interest.
I want to be careful here, because this is the sentence people will take out of context. It does not mean never move. It means the monthly column and the horizon column answer different questions, and a move is the change where they disagree most. Buying the bigger house hurts monthly and hurts later. The lateral move helps monthly and hurts later. Nothing about the first number tells you the second.
The state is doing more work than the house
If the move crosses a state line, the Move House change takes the new state too, and sets it at the right date: a move that has already happened changes the state outright, while a future one leaves today's state alone and switches it at the year you move, so your working years stay taxed where you are actually earning. One relocation, one place to set it.
Same $560,000 house, same 7.24% loan, three different states:
The New Jersey version of this move costs $821 a month more than the Tennessee one, and by the end of the plan the gap is $661,972 — before anybody mentions income tax, which is the thing people actually research. Property tax is a percentage of a number that keeps going up, charged every year, forever. It behaves like a second mortgage that never amortises, and it is almost always the quieter and larger half of a cross-state move.
The income tax side matters too, and it matters differently depending on when you go. Moving to a no-income-tax state in your forties saves tax on wages; moving there at retirement saves it on withdrawals and often on pension income as well, and some states exempt pensions specifically. When I ran the same move at 60 instead of 45, the portfolio at retirement went up $205,005, because fifteen more years of a paid-down 5.25% mortgage beat fifteen years of a new 7.24% one by more than the house gained.
What this will not tell you
I would rather say this here than have you find it:
The horizon figure is the investment portfolio, not your net worth. The house is not in it. That is why every comparison above is between two scenarios that both own a house — the numbers are honest against each other, and they would not be honest against a scenario that sells up and rents.
The plan holds your home's value flat. It does not guess at appreciation on the house you live in. Second properties grow with inflation; your own home sits where you put it. That is a conservative assumption rather than a neutral one, and if your local market has its own ideas, the plan does not know them.
It is one path, not a distribution. A thirty-year mortgage decision deserves the same treatment as a retirement date, which means asking how it holds up across many market outcomes rather than one. The Monte Carlo simulation in the app does that part, and sequence-of-returns risk is why it matters.
And the obvious one: it does not know whether the new place has a garden the kids will remember. There is no field for that, and I am not going to pretend the half million settles it.
When giving up the rate is still right
A few cases where I would not spend much time on the arithmetic above, because the arithmetic is not the binding constraint:
The move changes your income. A job that pays materially more makes the rate comparison a rounding error. Model the income change in the same stack and look at the two together, not the mortgage on its own.
You are moving to a much cheaper market. A worse rate on a smaller loan is a better loan. That is the lateral case above, taken further, and it is the one scenario where the monthly and horizon columns tend to agree.
You are buying down the loan with real equity. Six or seven years into a low-rate mortgage in a market that moved, the proceeds can make the new loan small enough that the rate stops dominating. The sale block above is where you find out, and it is the first thing the form asks.
The house is wrong in a way money does not fix. Stairs you cannot do in ten years, a commute eating an evening a day, a school that is not working. Those are not financial problems with a financial answer. The point of costing them is to pay for them deliberately.
Go and run yours
That link opens the real application against the sample household, with everything unlocked and nothing saved anywhere. Go to the Scenarios tab, find Scenario Toggles, add a Move House change, and put your own numbers in the boxes: what you would sell for, what you would buy, today's rate, the state. Every figure above will redraw. Stack a second change on top of it — a salary that stops, a car bought later — and watch the two columns disagree.
Then do it with your own plan. planbend is free to start and never asks for a bank login. If you would like a professional's read before you sign anything, there are directories on the Connect with a professional page.
My friend, for what it is worth, has not moved. He now knows what it would cost, which is a different thing from being stuck.