Final answer:
A rate lock is a lender's guarantee of an interest rate for a set period, and when it's getting ready to expire, borrowers must act to secure a rate, extend the lock, or face potential rate increases.
Step-by-step explanation:
When discussing a rate lock, the term refers to a guarantee from a lender to lock in a specific interest rate and a set number of points for a determined period while a loan application is processed. This is most commonly associated with the mortgage industry. If a rate lock is getting ready to expire, it means the period during which the lender has guaranteed the interest rate is nearing its end. Borrowers need to be aware of the expiration since rates may rise, and it could affect the affordability of the loan. If the rate lock expires before the loan is finalized, the borrower might need to either extend the lock for a fee, float the rate, risking a higher rate, or lock in a new rate based on current market conditions.