A new Clever Real Estate survey of 1,000 homeowners found that 41% wish they could move, and 60% say rising home prices have made them less likely to do it. Rates play a part too. Many of us bought or refinanced when mortgage rates were far lower than today's, and giving up that rate feels like a big loss.
Rates are certainly higher than they were five years ago. But before deciding that a higher rate means you can't move, it's worth asking a different question: what is your Total Life Rate?
What is a Total Life Rate?
Your Total Life Rate (also called a blended debt rate) is the single average interest rate across all of the money you owe: mortgage, car loans, student loans, credit cards, and home equity lines.
It matters because most of us focus on the mortgage rate and don't think about the other debts we're carrying, which often cost much more.
The Formula
Total Life Rate = Sum of (each balance × its interest rate) ÷ total of all balances
Multiply each debt by its interest rate, add those amounts together, then divide by the total you owe.
An Illustrative Example
| Debt | Balance | Rate | Annual Interest |
|---|---|---|---|
| Mortgage | $500,000 | 3.5% | $17,500 |
| Car Loan | $40,000 | 7.5% | $3,000 |
| Credit Card | $50,000 | 20% | $10,000 |
| Student Loan | $30,000 | 6.5% | $1,950 |
| HELOC | $100,000 | 8% | $8,000 |
| Total | $720,000 | $40,450 |
Total Life Rate: $40,450 ÷ $720,000 = 5.62%
A few things stand out:
- The 3.5% mortgage is pulling the average down. Everything other than the mortgage totals $220,000 and averages about 10.4%.
- A single credit card balance accounts for $10,000 of the $40,450 in annual interest.
- Today's mortgage rates are higher than 3.5%, but this household's overall rate is already above 5.6%.
A "What If" to Think About
Let's say, hypothetically, this household used home equity in a move to pay off the credit card and the HELOC, and took on a new $500,000 mortgage at 6.75%.
- New Total Life Rate: about 6.79% (higher than before)
- Total debt: $570,000 (down $150,000)
- Annual interest: about $38,700 (down about $1,750)
The rate went up, but total debt and annual interest cost went down. That's why the rate alone doesn't tell the whole story.
This example is simplified. It leaves out closing costs, taxes, insurance, and loan terms, all of which matter, and the "right" answer will look different for every household.
Why It Matters
- A low mortgage rate can mask expensive consumer debt.
- It shows your overall cost of borrowing, not just one piece of it.
- It gives you a fuller picture when thinking about a move-up home, a downsize, or another real estate goal.
- It turns "rates are too high" into a more specific question: what would this look like for us?
A Few Things to Keep in Mind
- Rolling unsecured debt (like credit cards) into a mortgage makes it secured by your home.
- A lower rate over a longer term can mean more total interest paid over time.
- Closing costs, qualification requirements, and the loss of a low existing rate all count.
This post is for educational purposes only and isn't financial, tax, or legal advice. I'm a real estate broker, not a financial planner or lender. For decisions about your own debts, please consult a licensed lender, CPA, or financial advisor.
Let's Talk It Through
If you're curious about your own Total Life Rate, send me your balances and rates and I'll run the numbers with you. From there, we can talk about what a move might look like for your situation, and I can connect you with trusted lenders or advisors to explore the financial side.
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