The shelf life of a mortgage rate quote is short.
From the moment a lender gives out a rate quote, that rate begins to spoil. It may be a few minutes or a few hours before it goes bad – but it will eventually go bad.
Rate quotes expire because mortgage rates are pegged to the prices of bonds, which are securities bought and sold on Wall Street.
Bonds are like stocks. Their prices change from minute-to-minute. And, just like you wouldn’t expect to buy stock in Apple at yesterday’s price, you shouldn’t expect to get your mortgage rate at yesterday’s price, either.
So, when your lender tells you to “act quickly,” it’s not a high-pressure sales tactic. It’s advice based on the real-world way that mortgage rates work.
When you get a mortgage rate, you have two choices at that moment:
- Commit to the mortgage rate on the spot
- Don’t commit to the mortgage rate
There’s no rule for what you should do.
Some home buyers get a rate quote, like what they see, and commit to it. The lender then locks the rate and begins moving the loan application forward.
Other home buyers get a mortgage rate quote and prefer to do nothing, waiting it out until they’re more sure about the loan, their lender, or their goals.
Either choice is fine – buyers should do what makes them most comfortable.
Whether you choose to lock your rate or let it float, mortgage rates are unpredictable. Bond markets could push rates lower overnight. Or, markets could lead rates higher.
We can’t predict the future, and you shouldn’t second-guess your rate lock choice.
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