The lock, or lock-in, has two meanings in the world of mortgage refinancing.
First, it’s the timeframe in which a mortgage loan cannot be paid off earlier than stated without incurring a financial penalty. The lock-in exists so that the lender is assured of obtaining a certain minimum return on their investment in the form of interest payments.
Lock-in also refers to how long a lender has agreed to honor a quoted interest rate on a mortgage or mortgage refinancing regardless of the going market rate increases before the final paperwork is signed.
The rates are usually held, or “locked in,” for anywhere from 30 to 90 days.