Should you pay to extend your mortgage rate lock? What to do when your closing gets delayed.

Rates jumped this week. On October 1, Freddie Mac's average 30-year fixed rate hit 7.28%, up from 7.03% the week before. That's the biggest one-week jump since October 2022.

If you're under contract right now, that jump matters most if your closing gets pushed back.

When does your rate get locked?

Most buyers lock their rate once they're under contract, usually for about 30 days. The lock holds your rate no matter what the market does, as long as you close before it runs out.

Most of the time, 30 days is enough. Sometimes it isn't.

Why do closings get delayed?

It happens more than people think. A title issue comes up. A payoff letter for a lien on the property takes longer than expected. Sometimes the seller drops the ball, and sometimes the buyer does.

Whatever the cause, you end up with the same problem. Your settlement date moves, and your rate lock is about to expire.

What does it cost to extend a rate lock?

It varies by lender, but a typical extension runs about a quarter of a percent of the loan amount for every 15 days.

On a $400,000 loan, a 15-day extension costs about $1,000.

Nobody wants another $1,000 bill when a closing is already running late. You may have movers booked and a lease ending, and now this. So it's fair to ask whether it's worth it.

What happens if you don't extend?

If your lock expires, you take whatever the rate is on the day you relock.

Say you locked at 7%, and today's average is 7.28%. On a $400,000, 30-year fixed loan, principal and interest goes from about $2,661 a month to about $2,737. That's about $76 more every month.

The extension pays for itself in about 13 months. After that, you keep saving every month for as long as you have the loan.

And rates can move fast. This week they rose a quarter point in 7 days.

Who pays for the extension?

That's negotiable. When the settlement date changes, the buyer and seller sign an addendum to the contract, and the cost of the extension can be part of that conversation.

Who wins that conversation usually depends on whose fault the delay is. If the seller's side caused it, the buyer has a strong case for asking the seller to cover it. If the buyer's side caused it, that's a harder ask.

When might you skip it?

If rates have dropped since you locked, talk with your lender before you pay to extend. Relocking could cost you less.

If rates have gone up, like they did this week, extending is usually the smart call.

This example is for illustration only and is not a quote or an offer of credit. Payments shown are principal and interest only on a $400,000, 30-year fixed-rate loan, and don't include taxes, homeowners insurance or mortgage insurance. Rates, fees and extension terms vary by lender and change daily.