Loan Officer Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

An extended rate lock is typically associated with new construction loans because these loans generally have longer timelines due to the process of building a home from the ground up. The duration of construction can often exceed the typical timeframe for other types of loans, such as a refinance or purchase, which usually follow more straightforward and quicker closing processes.

With a new construction loan, borrowers may want the security of locking in an interest rate for an extended period to protect themselves against potential rate increases while waiting for their homes to be completed. This extended lock can span several months or even longer, aligning with the construction timeline.

In contrast, home equity loans and refinances usually close within a shorter period, making them less likely to require extended rate locks, as the borrowing period is more predictable. Similarly, purchase transactions also tend to have more predictable timelines and generally do not necessitate extending rate locks to the same degree as new construction.