Finance
What is the purpose of a 'lock-in' or 'rate lock' in a mortgage transaction?
ATo prevent the borrower from refinancing for a specified period
BTo guarantee a specific interest rate for a defined period while the loan is being processed✓ Correct
CTo lock the property from being shown to other buyers
DTo ensure the down payment is held in escrow until closing
Explanation
A rate lock (lock-in) is an agreement between the lender and borrower that guarantees the interest rate, and sometimes the points, will not change for a specified period (typically 30–60 days) while the loan application is being processed and the transaction closes.
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