Interest Rate Lock

An interest rate lock is an agreement between a borrower and a lender that allows the borrower to secure a specific interest rate on a loan for a set period, typically during the mortgage process. This means that even if interest rates rise before the loan closes, the borrower will still pay the locked-in rate. Locks are beneficial in a fluctuating market as they provide stability and predictability in monthly payments. However, if rates decrease, the borrower may miss out on a lower rate unless they have a "float down" option.