MortgageCast

If your rate lock expires before your loan closes, you will typically lose the locked rate. You will then be subject to the current market rates at the time of closing, which could be higher. In some cases, you may be able to pay a fee to extend the lock, but this is not guaranteed.

In a normal, upward-sloping yield curve environment, shorter terms have lower rates. However, during certain economic conditions (like when the Federal Reserve is aggressively raising rates to combat inflation), the yield curve can “invert.“ This means short-term borrowing costs become higher than long-term costs. While this phenomenon is more common in bonds, it can occasionally trickle into mortgage pricing, making short-term loans like 5/1 ARMs more expensive than 30-year fixed rates.

Common balloon mortgage terms are 5/25, 7/23, or 10/20. The first number is the balloon period in years, and the second is the amortization period. For example, a 7/23 balloon mortgage has monthly payments based on a 23-year amortization, but the full remaining balance is due after 7 years.

The largest fees are often the loan origination fee (charged by the lender), the appraisal fee, and title insurance. In some states, transfer taxes can also represent a significant portion of the total closing costs.