Mortgage Rate Lock Float Down
Candlefocus EditorWhen a borrower takes a mortgage rate lock float down, they lock in at the current market rate with the option of reducing the rate if it drops during the period. The rate will not go any higher than the locked rate; any break in the rate will be passed on to the borrower. This means that borrowers have protection against an increase in rate, as well as the potential to save more money in case of a decrease.
Lenders typically charge a fee for the float down option, though the cost is determined by each lender. Borrowers should know the cost of the option before signing up for the service to ensure they are getting the best rate.
The drawback to the mortgage rate lock float down option is that borrowers will not automatically be informed if rates change. Borrowers must remember to contact their lender if they want to exercise the float down option. This can be difficult to keep track of especially if the borrower is dealing with a slow lender or is concerned about rates increasing.
Overall, a mortgage rate lock float down offers borrowers the chance to save money and protect themselves from rate increases. With the potential to save money based on the market interest rate, a float down option can be perfect for those trying to secure a higher rate during the peak of a busy home-buying market. Borrowers should weigh the costs and rewards carefully to determine if the float down option is right for them.