As mortgage rates have edged higher, many borrowers have been locking in loan rates for a home purchase or refinancing.
What does locking in a loan mean?
A lock-in agreement — also called a rate lock or rate commitment — protects against sudden spikes in interest rates by freezing the terms of a loan while it is being processed, which could ultimately save a borrower tens of thousands of dollars in interest costs over the life of the loan.
For every percentage point rise in rates, 300,000 to 400,000 ‘would-be buyers’ historically are priced out of the market in a given year, according to the National Association of Realtors.