Mortgage Dictionary

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The interest rate that a borrower pays on his/her mortgage is not fixed on the date that the borrower applies for a loan. That rate will vary daily, based on market conditions, until the day that closing actually occurs.

To prevent the interest rate from "floating", the borrower can lock in an existing rate. This means that the borrower pays a fee and the lender agrees to hold the points and interest rate constant. The lock-in agreement is good for a specified length of time - 2 weeks, 30 days, 60 days, sometimes as long as a year.

See also:   Should You Lock In? | How to Assess the Mortgage Lock-In Decision