What your low mortgage rate is actually worth
The short answer: on a $350,000 balance with 25 years left, a 3.25% mortgage costs $1,705.61 a month. Re-borrowing the same balance at today's average rate (7.40%, Freddie Mac PMMS, week ending October 15, 2026) costs $2,563.75. The payment gap is $858.14 a month; valued in today's dollars, keeping your rate is worth about $56,700 over five years. That value vanishes the day you sell, which is why it belongs in the sell-or-stay decision.
The payment table — same balance, same years left
Every row is a $350,000 loan with 25 years (300 payments) to go. Only the rate changes:
| Rate | Monthly payment | Extra vs 3.25% | Extra over 5 years |
|---|---|---|---|
| 3.25% (the keeper) | $1,705.61 | — | — |
| 5.00% | $2,046.07 | $340.46 | $20,428 |
| 6.00% | $2,255.05 | $549.44 | $32,966 |
| 7.40% (today's average) | $2,563.75 | $858.14 | $51,488 |
The table above is raw extra payments, undiscounted. The decider's headline value is stricter: it discounts those future payment savings at today's rate and adds the lower balance you'd still owe at year 5, also in today's dollars. On the 3.25% versus 7.40% example, that present value is about $56,700 — lower than adding up every future dollar as if it were a dollar today.
And it understates a real move: buy again at the same price and your new loan is usually bigger than your old balance, because selling costs come out of your proceeds first. In the decider's default example the new payment is $2,714.13 — a jump of $1,008.52 a month.
Three ways a low rate pays you
- Every month, in cash. The payment gap above is money that stays in your account instead of going to a lender — roughly $10,300 a year on the example.
- Faster equity. At 3.25%, about $758 of the first payment pays down principal. On the decider's example new loan — $392,000 at 7.40% over 30 years — only about $297 of the first payment does. A cheap loan builds your ownership faster from day one.
- Options. A low payment is a cushion in a layoff, a slow season, or a retirement — and it's why "just rent it out instead" pencils for so many owners weighing a sale.
What a low rate is NOT
It isn't a reason to never sell. A job, a family change, a house that no longer fits — those are life decisions, and the right move can be worth more than $858 a month. The rate is also worth less than the table suggests if you'd pay the loan off early anyway, and worth nothing at all once the loan is gone. The point isn't "never sell." The point is: price the rate before you give it up, the same way you'd price anything else you own.
Run your own balance and rate through the stay-or-sell decider — the rate verdict is the first thing it shows you.
Rate source: Freddie Mac Primary Mortgage Market Survey national averages, week ending October 15, 2026 (30-year fixed 7.40%; 15-year fixed 6.71%). Payments are principal and interest only, computed with the standard amortization formula. Estimates, not financial advice.