Loan Lock

Interest rates fluctuate on a day-to-day basis. Meanwhile, closing a mortgage (or any kind of loan, for that matter) is a pain. It involves massive amounts of paperwork, checking and re-checking information, and a constant barrage of calls/emails/texts with your loan officer. It can take weeks to finally get to the point where a check is issued.

This can lead to danger. You'll agree to an interest rate of 7% when you first apply for the loan. Then, weeks later, when the deal is finally closing, rates will move. Now they can only offer you a 7.5% rate.

Ugh. All that running in circles cost you half a percentage point.

Loan lock mitigates this risk. The bank agrees to lock in your rate for a specified period of time.

You agree to 7% early in the process. And then you loan-lock it in place. (We're imagining kind of a game show scenario, where your loan officer brings out a padlock the size of a small child and yells through a megaphone "I declare this loan...locked!") Now, even if it takes weeks to close the deal, you still get that 7% rate.