How Long Will Your Mortgage Rate Quote Last?

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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?

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Mortgage rates have a short shelf life.

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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.

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Rate quotes expire because mortgage rates are pegged to the prices of bonds, which are securities bought and sold on Wall Street.

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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.

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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.

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

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· Commit to the mortgage rate

· Don’t commit to the mortgage rate

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There’s no rule for which choice is better.

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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.

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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.

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

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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.

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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.

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