rate lock agreement

A rate lock agreement is a commitment between a borrower and a lender that secures an interest rate for a loan, typically a mortgage, over a specified period. This means that even if market rates rise before the loan closes, the borrower will still receive the agreed-upon lower rate. Rate locks can last from a few weeks to several months and help protect borrowers from potential rate increases during the loan process. However, if rates drop, borrowers might miss the chance to secure a better rate unless they can renegotiate the terms.