Should You Give Up Your 3% Rate? The Real Math for Texas Move-Up Buyers
- 5 days ago
- 4 min read
If you bought or refinanced in 2020–2022, there’s a good chance you’re sitting on a mortgage rate around 3%. And now you’re asking the big question:
“Does it make financial sense to give up my 3% interest rate and buy a new home in Texas?”
For Texas move-up buyers, this isn’t just emotional — it’s mathematical. Let’s break down the real numbers, market dynamics, and long-term strategy so you can make a confident decision.
The “3% Mortgage Rate Lock-In” Effect in Texas
Many Texas homeowners feel stuck because of what economists call the “lock-in effect.” When current mortgage rates are higher than your existing rate, selling feels like a financial loss.
However, a mortgage rate is only one variable in a much larger equation that includes:
Home equity growth
Texas property appreciation
Lifestyle upgrades
Inflation and wage growth
Refinance opportunities
According to data trends reported by the Federal Housing Finance Agency and regional insights from the Texas A&M Real Estate Center, Texas homeowners have experienced significant appreciation over the last several years — especially in markets like Houston, Dallas-Fort Worth, Austin, and San Antonio.
That appreciation changes the math.
How Much Equity Do You Actually Have?
Let’s assume:
You purchased in 2021 for $400,000
Your home is now worth $525,000
Your current loan balance is $360,000
That’s roughly $165,000 in gross equity.
After selling costs, you may walk away with $125,000–$140,000 in usable equity. That’s a powerful down payment on your next home.
Equity reduces:
Your new loan amount
Your monthly payment
Your interest expense over time
Many move-up buyers underestimate how much leverage their equity provides.
Compare Payments — Not Just Rates
Let’s look at a simplified example.
Current Home
Loan: $360,000
Rate: 3%
Principal & Interest: ≈ $1,518/month
New Home (Move-Up Scenario)
Purchase Price: $650,000
Down Payment: $130,000 (from equity)
Loan: $520,000
Rate: 6.5% (example)
Principal & Interest: ≈ $3,287/month
Yes, the payment increases.
But here’s what matters:
You now own a significantly larger or upgraded home.
You are financing $520,000 instead of $650,000 because of your equity.
Future refinance potential exists if rates decline.
The real comparison is lifestyle + long-term wealth vs short-term rate attachment.
Appreciation Works on the Bigger Asset
Real estate appreciation compounds.
If Texas real estate appreciates at even 3–4% annually:
A $400,000 home gaining 3% grows by $12,000 per year.
A $650,000 home gaining 3% grows by $19,500 per year.
That’s a $7,500 annual difference in appreciation.
Over 5–7 years, that gap becomes meaningful.
When you move up, appreciation works on a larger base.
The Refinance Strategy (“Date the Rate”)
Mortgage rates are cyclical. The Federal Reserve adjusts monetary policy based on inflation and economic conditions. While no one can time rates perfectly, historically:
Buyers can refinance.
Buyers cannot retroactively buy at yesterday’s home prices.
If rates decline even 1% in the future, refinancing could significantly reduce your payment without giving up the home you wanted.
The mistake many move-up buyers make is assuming today’s rate is permanent.
It isn’t.
The Cost of Waiting in Texas
Waiting has hidden costs:
1. Continued Home Appreciation
If home values increase 4% annually, that $650,000 home could be $676,000 next year.
2. Inventory Constraints
Texas housing inventory fluctuates, and desirable move-up homes in strong school districts remain competitive.
3. Lifestyle Delay
More space, better schools, home office, pool, upgraded neighborhood — these have real-life value.
4. Inflation
Wages often rise over time, making today’s payment more manageable in future dollars.
hen It Doesn’t Make Sense to Move
Being strategic matters.
It may not be the right time if:
Your income has not grown proportionally.
Your long-term plans are uncertain.
Your new payment would strain your budget.
You plan to move again within 2–3 years.
Move-up buying works best when you plan to stay 5–10+ years.
The Real Question Isn’t the Rate
The real question for Texas move-up buyers is:
Are you financially and strategically ready to upgrade your asset base using your equity?
A 3% mortgage is attractive.
But staying in a home that no longer fits your life has opportunity costs too.
The smartest move-up buyers analyze:
Net equity position
Payment comfort zone
Long-term appreciation
Refinance flexibility
Tax implications in Texas
Final Thoughts: Texas Move-Up Buyers in 2026
The Texas real estate market remains resilient due to:
Population growth
Corporate relocation
Job expansion
Long-term housing demand
If you’re holding a 3% rate, you’re in a strong equity position. That gives you leverage — not limitation.
The goal isn’t chasing the lowest interest rate.
The goal is building long-term wealth while aligning your home with your lifestyle.
Thinking About Moving Up in Texas?
If you’re a Texas homeowner wondering whether to sell and buy at the same time, run the real numbers first.
A personalized move-up analysis can show you:
Net proceeds from sale
Down payment strategy
Updated mortgage payment scenarios
Refinance break-even analysis
Cash-to-close requirements
The math may surprise you.
And clarity removes hesitation.
Thinking About Buying Now?
As a Texas-licensed mortgage professional, I help buyers explore:
FHA, Conventional, VA, and USDA loans
First-time homebuyer programs
Rate buydowns and temporary interest rate strategies
Pre-approvals to strengthen your offers
If you would like to see real numbers based on your situation, I am happy to run personalized scenarios so you can make a confident, informed decision.
Jennifer No
RMLO
C&T Mortgage, Inc
18739 Mueschke Rd Ste B
Cypress, TX 77433
832-220-1480 (office)
936-525-7225 (cell)
Company NMLS: 1231852
Individual NMLS: 1310829
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