A lender's commitment to hold a specific interest rate for a borrower for a set period during the loan process.
Why Rate Lock matters on the exam
This term belongs to Financing. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Rate Lock
Every Freehold question shows why the right answer is right — and cites its source.
A seller who defaults by refusing to convey, resulting in the buyer losing a favorable interest rate lock and incurring extension fees, may be liable to the buyer for:
Only punitive damages intended solely and exclusively to punish the seller for deliberately refusing to convey the property
Compensatory damages that reasonably flow from the seller's breach, potentially including such incidental losses
The buyer's full future mortgage payments projected over the entire remaining life of the loan, discounted to present value
Nothing beyond a simple return of the earnest money deposit already paid by the buyer
Show answer & explanation
Compensatory damages that reasonably flow from the seller's breach, potentially including such incidental losses — A buyer harmed by a seller's breach may recover compensatory damages for losses that reasonably and foreseeably resulted from the breach, which can include documented incidental costs like lost rate locks or extension fees, in addition to any earnest money.
Source: PSI National Real Estate Exam Content Outline §7 Contracts
A lender typically relies on the acceleration clause before initiating which action?
Recording a satisfaction of mortgage
Foreclosure
Issuing a rate lock
Approving a loan assumption
Show answer & explanation
Foreclosure — Before foreclosing, a lender invokes the acceleration clause to make the entire debt due at once, since foreclosure is typically pursued for the full balance rather than only overdue installments.
Source: PSI National Real Estate Exam Content Outline §4 Financing
A borrower who wants to protect against rising interest rates while a loan is being processed should request a:
Rate lock
Subordination agreement
Deficiency waiver
Estoppel certificate
Show answer & explanation
Rate lock — A rate lock guarantees a specific interest rate for a set period while the loan application is processed, protecting the borrower from rate increases before closing.
Source: PSI National Real Estate Exam Content Outline §4 Financing
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