The Best Ways to Unclock the Golden Handcuffs of a Low Mortgage Rate

The Best Ways To Unlock the Golden Handcuffs Of A Low Mortgage Rate

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The term “Golden Handcuffs” refers to financial incentives or benefits offered to employees in exchange for their continued employment. Initially recorded in the 1970s, this retention strategy has been in practice for quite some time. Although golden handcuffs may provide a sense of security and stability, they more commonly result in feelings of entrapment and resistance to change. After all, it can be difficult to walk away from lucrative stock options or a generous salary.

Interestingly, the concept of golden handcuffs can extend beyond employment, applying to a number of life circumstances. Homeownership, for instance, has become one of the most recent examples of golden handcuffs in today’s real estate market.

Consequences of Historical Lows

For nearly a decade, the average 30-year fixed mortgage rate remained under 4%. In January 2021, it hit an unprecedented low at 2.65%. During this period, the Federal Reserve lowered the federal funds rate to counteract the economic impact of COVID-19 and boost consumer spending. Hence, the influence on mortgage rates.

Some established homeowners chose to refinance their own mortgages at a lower rate. Others considered taking out new mortgages for their first home, investment properties, and more.

Individuals and families across the nation jumped at the opportunity to secure a low interest rate, which forced buyers to quickly lock in a property. Buyers often engaged in bidding wars, offering well above asking prices in order to secure a home in a highly competitive market with limited inventory.

In terms of housing, the pandemic created an environment in which:

  • mortgage rates hit an all-time low
  • home prices skyrocketed due to high demand and limited supply
  • new builds were halted or delayed
  • potential buyers broadened their search radius due to remote work flexibility
  • waiving contingencies and bidding wars were commonplace

So what happened? Amid the intense competition between prospective homebuyers, some opted to step away from the market. While many successfully snagged homes they were happy with, others felt they settled for far less than they originally sought. Eventually, they came to regret their purchases.

A 2022 American Home Buyers study by Anytime Estimate found that over 70% of homebuyers regret their pandemic-era home purchase. The fear of missing out on a low mortgage rate combined with the pressure of rising housing prices led many prospective buyers to overcompromise, rush the home-buying process, and spend much more than they had originally planned.

Feeling Trapped

Today, many homeowners feel trapped by their existing low mortgage rates. When one has a considerably lower rate, it doesn’t seem rational to finance a new mortgage at the current rate of 7%!

Golden handcuffs can create a sense of tunnel vision, in which alternative paths forward are difficult or impossible to imagine. As a result, a significant portion of homeowners are opting to stay in their homes, as doing so is financially advantageous. They are choosing to remain, even in situations when they would otherwise move or relocate, such as:

  • job changes
  • a shift from remote to in-office hours
  • being closer to family
  • expanding (or losing) family
  • health or mobility issues
  • caregiving responsibilities

The Silver Lining of Golden Handcuffs

Let’s be honest: Golden handcuffs are a first-world problem.

It’s a good position to be in; the key is to learn how to utilize it to one’s advantage. Truthfully, “golden handcuff” scenarios don’t offer much compromise when it comes to one’s health or personal life deteriorating under the constant pressure of a demanding job or, in this case, a less than ideal home situation.

To see the silver lining, it’s important to remember that no one is being forced to remain in these handcuffs. Initially, it will be difficult to escape the tunnel vision to see the bigger picture. However, in doing so, you’ll eventually learn to free yourself.

Free Yourself by Thinking Outside of the Box

Letting go and moving on isn’t so scary when you understand that:

  • A) you have options and
  • B) you are open to learning what those options entail and how they can benefit you in the long run.

Whether you’re feeling chained to a job, a lifestyle, or a low mortgage rate, there’s a way to break free, especially when you think outside of the box.

Choose to love where you are

Okay, so you’re unhappy with the compromises you made when you bought your home. You may have come to realize that the house is too big, too small, too outdated, or simply doesn’t suit you. Whatever the reasons are, the house just feels like it wasn’t the right purchase.

Take a moment to consider if the grass would really be greener on the other side. Instead of entertaining negative thoughts, shift the focus to positive ones. Choosing to love and be grateful for where you are and what you have is one of the first things to try when feeling stuck or dissatisfied.

Express gratitude for the roof over your head, immerse yourself in the community, and establish strong connections with others. It might also help to consider other tools that can reframe your perspective, like investing the money saved from the low interest rate on furnishings, cleaning services, or supporting your community.

Turn your home into what you want

Turn lemons into lemonade! If you have the financial means or handyman skills to change things up, start with where you are. A low mortgage rate can be paralyzing to move away from, so why not explore the most practical options within reach?

With a low mortgage rate and a little time, a homeowner can find themselves in a position to make home improvements that will fit their preferences and/or increase the value of their property. In fact, with home values quickly increasing, a home equity loan could be a very strategic tool for borrowing against one’s home equity to fund renovations.

Take this moment to turn your home into what you want—renovate your kitchen, add an addition, or even build another structure on your land. Depending on what you’re looking for, investing in what you already own could very well be a much more affordable option than financing a new property altogether.

If you’ve been reading along on our adventures for a while, you might recall that Brian and I tore out our master bathroom. We poured our blood, sweat, and tears into our DIY rebuild, and I am so flippin’ happy that we did. In all sincerity, the previous bathroom took a toll on my well-being; it was such a depressing space. I actually used to go back to my previous home to shower sometimes—that’s how much I didn’t like our bathroom. Ever since Brian and I completed our renovation, the home has felt more like it’s actually ours.

  • Unlock the Golden Handcuffs: Turn it into what you want
  • Unlock the Golden Handcuffs: Turn it into what you want
  • DIY Master bathroom - After

House hack for more freedom

House hacking is a strategy in which a homeowner rents out a part of their home or property they live in to earn passive income. It might not be the most fun or comfortable way to break the chains of golden handcuffs, but it sure is effective.

Renting out a room(s) or basement can help alleviate the illusion of feeling trapped. It can reduce the need to work full-time, allow greater flexibility to travel, and even create the opportunity for a homeowner to live part-time elsewhere.

Convert it into a rental

Hold onto your home with its low mortgage rate and rent it out instead. With low inventory and high rent rates in the current market, you could likely pull in a hefty rental income to cover the mortgage, maintenance, and more. In fact, depending on where you choose to move, you might even earn enough to offset some of the costs of financing a new mortgage or rental.

Be sure to consider what kind of rental would be ideal for your situation.


A long-term rental is typically rented unfurnished with a 12-month or longer lease, though it can be a shorter period depending on the terms. This type of rental is the most common on the market, as it is the easiest and most stable to manage. Long-term renters tend to take better care of the property as they consider it to be their home. They are also usually responsible for all of their own utilities, unless otherwise stated in the lease agreement.


A mid-term rental is usually a furnished property that rents for more than 30 days but less than a year. It’s suitable for traveling health-care professionals, students, seasonal workers, families in a new city, and other temporary situations. Mid-term rentals allow homeowners a great deal of flexibility to earn rental income while having the freedom to live in their homes part-time, complete repairs or renovations, and travel as they wish.


A short-term rental is ideal for tourist hotspots and popular destinations. It is typically a furnished home that can be rented out nightly or weekly for up to 30 days. Converting a home into a short-term rental to be featured on bookable sites like Airbnb or VRBO can be a highly lucrative option, often earning 2-3x more than a long-term rental. However, it requires the most effort out of all rental options since the property must continuously be maintained, bookable, cleaned, and ready for the next guests.

Sell and relocate elsewhere

Cash out and enjoy yourself in a more affordable area. You can choose to move to a less expensive part of the country, purchase a temporary home on wheels (hello, RV or van life!), live as an expat in a different part of the world, or do whatever your life reasonably allows. It doesn’t have to be a permanent solution, just one that allows you to comfortably change things up for now! Shake those handcuffs loose and remember that everything in life is temporary.

Buy with an assumable mortgage

Assumable mortgages were popular in the late 1970s and early 1980s, when mortgage rates were historically high, reaching over 18%. Though current interest rates aren’t as high as they were then, it seems that assumable mortgages are making a comeback.

An assumable mortgage is a home loan that can be transferred from the seller to the buyer with the same interest rate, terms, and payments. In most cases, only government-backed loans, such as a FHA, VA, or USDA loan, allow for assumptions. A buyer must qualify to take over an existing loan, which requires a good credit standing and a low income-to-debt ratio.

Sell or rent your current home and purchase a new one with an assumable mortgage. It allows you to move forward with a new mortgage at an interest rate of 2–4%. In addition to having to qualify for this type of loan, however, a potential buyer is also responsible for the “assumption gap,” which is the difference between the home sale price and the remaining mortgage balance. For instance, if a home is selling for $250,000 with a $165,000 mortgage balance remaining and a 3% interest rate, a buyer would be responsible for covering a down payment of $85,000. recently released a new checkbox feature that allows potential home buyers to easily search for properties that offer assumable mortgages.

Roam is another user-friendly platform that helps connect potential buyers with assumable mortgages. Roam is currently only operational in five states—Arizona, Colorado, Florida, Georgia, and Texas—but intends to expand nationwide.

I highly recommend working with a well-versed real estate agent who is experienced with assumable mortgages in your preferred area.

Sell and refinance in the future

Be careful with this one. Without careful due diligence, you could end up in a pretty precarious situation. If you find that you can sell your home after an honest inventory of finances, employment stability and opportunity, and introspective thought, then do it.

Life unfolds through a series of decisions. Sometimes, the safest choice appears right in front of you, like staying put and holding onto your low mortgage rate. But what if there’s more to gain by selling and buying what you truly want? What if it’s worth the risk to jump?

You have to be honest with yourself. Would you be comfortable swallowing the costs of a higher interest rate and an inflated market? Are you willing to pay more for a safer environment, a shorter commute, and a better quality of life?

If you can, take the risk now and refinance your mortgage in the future when the rates are lower.

Maximize Your Quality of Life

The power and beauty of being in this country of ours is that we are free. If you are in a safe environment, free of external constraints, then you have the ability to change your life. This is considered an incredible privilege to so many in this world.

Golden handcuffs are an illusion. They are designed to keep the captive locked in a state of false comfort and an unimaginative routine. Don’t let these handcuffs stop you from achieving your own personal goals. If you want to make a change, then find a way to make a change.

A low mortgage rate is a great incentive to own a home. But if it’s keeping you from chasing after what you really want, then what’s the point? Ultimately, money and assets are resources that help you achieve your goals, build wealth, and create a meaningful life.

In the end, moving on from a low mortgage rate comes down to figuring out what your freedom looks like. How can you responsibly and affordably create the building blocks for the life you want? Even if your next move doesn’t look like where you want to be in 5 years, just remember—it’s all temporary.

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