Finance
A Mississippi buyer qualifies for a $200,000 mortgage. The lender 'locks' the interest rate for 45 days. If interest rates rise significantly before closing, the buyer:
AMust pay the new higher rate
BIs protected by the rate lock and will close at the locked rate, assuming closing occurs within the lock period✓ Correct
CMay lose the lock if rates rise more than 0.5%
DCan extend the lock for free
Explanation
A rate lock guarantees the borrower will receive the locked interest rate if the loan closes within the lock period. If rates rise, the borrower benefits from the locked lower rate. Rate locks protect borrowers from market volatility during the period between loan application and closing.
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