Finance
What is 'interest rate lock' and why is it important for Hawaii home buyers?
AA. A provision in an ARM that prevents the rate from exceeding a maximum level
BB. A lender's commitment to hold a specified interest rate for a buyer for a given period, protecting against rate increases before closing✓ Correct
CC. The federal government's control of mortgage interest rates
DD. A Hawaii law requiring lenders to disclose rate changes 30 days in advance
Explanation
An interest rate lock is the lender's commitment to provide the loan at a specified interest rate for a specified period (typically 30-60 days) regardless of market rate changes. Given Hawaii's high loan amounts, even a small rate increase during closing could significantly increase monthly payments, making rate locks especially valuable.
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