What is 'Loan Lock'
The securing of a specified interest rate on a mortgage that is in the process of being approved. A loan lock establishes the interest rate that a borrower will pay as long as the loan closes before the end of the lock period. Lock periods typically last from 30 to 60 days, though in markets where the loan approval process is slow, the lock period can last as long as 90 days.
BREAKING DOWN 'Loan Lock'
Borrowers like lock periods because they take away the uncertainty associated with constantly fluctuating mortgage rates. Particularly with expensive homes, a small increase in interest rates can mean a big change in monthly payment. This can sometimes mean the difference between an affordable mortgage payment and an unaffordable one.