Finance
What is the purpose of a 'rate lock' in Pennsylvania mortgage lending?
AIt locks in the property's appraised value for the duration of the mortgage
BIt guarantees the borrower a specific interest rate for a defined period while the loan processes toward closing✓ Correct
CIt prevents the lender from selling the mortgage to another servicer after closing
DIt locks in the Pennsylvania transfer tax rate at the time of application
Explanation
A rate lock is a lender's commitment to honor a specific interest rate for a defined period — typically 30, 45, or 60 days — while the loan is processed and the transaction moves toward closing. Rate locks protect Pennsylvania buyers from interest rate increases during the loan processing period. If rates drop after the lock, the buyer is generally held to the locked rate unless the lender offers a float-down option. If the transaction does not close within the lock period, an extension may be required at additional cost.
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