Understanding the Terms: "Lock" and "Float"

If I were considering financing or refinancing a home today, I would do the following: Lock if my closing was taking place within 7 days or Float if my closing was taking place between 8 and 60 days from now.

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers. Brought to you by the professionals at Quest Loans.

What does this mean?

Basically, a deposit is paid by a borrower to lock in an interest rate for a specific period of time while a mortgage application is being processed. If interest rates decline during this period, the float down option allows the borrower to obtain a lower rate.

For example, suppose a borrower locks in a rate of 5%. Before the borrower's mortgage application is complete, however, interest rates drop to 3.5%. If this borrower has a mortgage rate lock float down, they may lock in the lower mortgage rate before the mortgage is approved.

Welcome!

Welcome to 411 Rates, the place to get all the info you need about mortgages in a way you can understand it. We know that applying for a mortgage can be a daunting task. There is so much to know and the jargon can really make it confusing. Don't worry, you have come to the right place!

We would like to help you break down the entire loan process so that you aren't left scratching your head while you sign your name. It is important to know what you are agreeing to and how it will effect your life.

Please bookmark us and continue checking back for our frequent simple but informational posts regarding mortgages.