Pencil it out with real bids and real comps; the right answer here comes down to actual numbers. Talk to a contractor and get real bids for the addition, then figure out what funding it would cost, whether that is a second mortgage, a cash-out option, or cash on hand. Guessing at construction costs is how people talk themselves into or out of the wrong decision. The instinct to protect a below-market first mortgage is legitimate. If you hold a rate well below what a new purchase would cost you today, giving that up can be expensive in a way the sticker prices never show, and that is a genuine point in favor of improving the home you already have. One of us has lived in the same home for more than two decades, loves the neighborhood, and would seriously look at adding on before moving. The piece people forget is the after-value. Loop in the agent who helped you buy the home and have them comp out what the finished addition, say 600 square feet or a second story, would actually be worth once complete. Then compare that math honestly against the full cost of selling and buying up, agent compensation included. Nobody can promise where rates go from here, which is all the more reason to base the call on costs you can actually pin down, and to decide on the numbers rather than on the fear of losing the rate.