Longer lock, more risk, higher costs | Military Home Loans

Longer lock, more risk, higher costs


When a bank locks your rate, they’re guessing where the market will be when the lock expires.

  • If the market goes to crap, they promised you a great rate and have to deal with the change when they sell your loan.
  • If the market gets better, they can make more money than originally planned when they sell your loan.

You have risk, they have risk. How long are you asking the bank to stick their necks out?

The longer you want the rate locked for, the more the market can go to crap. We all know how things roll downhill, right?

Banks protect themselves by assuming the market will deteriorate more over time. They guess costs (points) will be higher 60 days from now compared to 30 days from now.

They pass those higher costs onto you. That’s why the costs on a 60 day lock are higher than a 30 day lock.


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