How Long Will Your Mortgage Rate Quote Last?

When you get a mortgage rate quote, it lasts from 30 minutes to eight hours, depending on how quickly Wall Street is changing. So, is it better to lock your rate or float it?

July 15, 2020 by Dan Green

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Mortgage rates have a short shelf life.

At the the moment a lender gives you a rate quote, it begins to spoil. It may take a few minutes or a few hours – but the rate you’re quoted 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. You wouldn’t expect to buy Apple stock at yesterday’s price, and you shouldn’t expect to lock a $219,000 mortgage at yesterday’s mortgage rates either.

When your lender tells you to “act quickly,” it’s not a sales tactic designed to create FOMO. It’s bona fide advice based on how mortgage rates change.

When you get a mortgage rate quote, you have two choices at that moment:

  • Commit to the mortgage rate
  • Don’t commit to the mortgage rate

There’s no rule for which choice is better.

Some home buyers get a rate quote, like what they see, and commit to it. That commitment locks their terms and moves their loan application forward.

Other home buyers get a quote and do nothing, choosing to wait it out until they’re more sure about the loan, or their lender, or their goals.

Either choice is acceptable – do what makes you most comfortable.

However, know this: mortgage rates are unpredictable. A strong economy doesn’t always move rates up, and a weak economy doesn’t always move rates down.

Bond market changes cause mortgage rate changes. The only way to protect against losing a rate you like is to lock it with your lender as soon as you get the chance.

You can’t predict the future and floating a mortgage rate introduces new risk.

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