Finance
What is 'rate lock' in Illinois mortgage lending and why does it matter?
AA lock preventing the lender from changing loan terms after approval
BAn agreement guaranteeing a specific interest rate for a defined period while the loan is processed; protects borrowers from rate increases✓ Correct
CA requirement that the borrower lock in a rate within 24 hours of pre-approval
DA state regulation preventing rate changes after a Loan Estimate is issued
Explanation
A rate lock (interest rate lock) is an agreement between the lender and borrower that guarantees a specific interest rate for a defined period (typically 30-60 days). This protects the borrower from interest rate increases while the loan is being processed.
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Key Terms to Know
Pre-Approval
A lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Math Concepts
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