![]() This fee is why very few people execute rate locks for longer than 90 days. Beyond 90 days, expect to pay higher rates and a non-refundable, upfront fee. In general, mortgage rates increase 12.5 basis points (0.125%) for every 15 days you add to your rate lock, up to 90 days. The farther into the future you want your lender to commit to a specific interest rate, the more they’re going to charge you for it - it’s a high-risk proposition, after all. The reason why mortgage rates increase as your rate lock duration increases is that lenders are absolutely committed to giving you your locked rate at closing, but the future is always uncertain. This is because the longer your rate lock, the higher your mortgage rate will be. That said, you may not want to make a 360-day lock, even if you’re buying new construction not set to deliver for another year. Beyond 90 days, the increment shifts to 30-day periods, up to 360 days total. Mortgage rates can be, all the way up to 90 days. Thankfully, rate locks are available for time frames longer than just 30 days. When you’re buying a home, for example, it can take 60 days or longer to close. ![]() Now, not all loans will be closed in 30 days. If the mortgage market suddenly worsens, for example, and mortgage rates jump 1/2 percentage point, because of your rate lock, your lender is obligated to honor your original quoted rate. This means that when you lock a loan, the lender will agree to honor your locked rate for a period of 30 days no matter what. The standard mortgage rate lock is good for 30 days. You agree to accept the rate offered, and the lender agrees to honor that rate for a pre-specified number of days. When you’re shopping for a mortgage and find the rate which meets your needs, it’s time to make a “lock” a commitment to your lender that you’re amenable to the rate offered.Īt this point, you’re entering a contract, of sorts. If you wait to lock a mortgage rate, the rate you want could be gone. ![]() This is why it’s recommend to do your mortgage rate shopping all in one day, when possible. MBS prices - and, by extension, mortgage rates - are always on the move. MBS prices can be affected by the policies of a government halfway around the globe ( ) and, by the policies of the government here at home. A rise in oil prices will affect MBS prices, and so will a drop. ![]() A strong economic report will affect MBS prices as will a weak one. So, what makes MBS prices change? A lot of things - same as with stocks. When MBS prices rise, mortgage rates drop and when MBS prices drop, mortgage rates rise. The only confusing part to remember about mortgage rates is that the move in the opposite direction of mortgage bond prices. When demand for mortgage-backed securities is high, MBS prices rise and, when demand for mortgage-backed securities is low, MBS prices fall. In this context, we see that mortgage rates - just like stocks - are driven by “the market”.
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