Buying a home is a thrilling adventure, but the unpredictability of interest rates can make it feel like a rollercoaster ride. Fortunately, there’s a tool that may help you stay on track: the float-down rate lock! Whether you’re a first-time homebuyer or looking to move up from your current home, understanding float-down rate locks could be your ticket to a more cost-effective mortgage. Please note that float-down rate locks are not available on all loans or product types. You should speak to your lender to confirm the availability of float-down rate lock. Let’s dive into what this feature is all about and how it may benefit you in a fluctuating market!
What is a Float-Down Rate?
A float-down rate lock is a feature that allows borrowers to lock in an interest rate on their mortgage while still having the option to take advantage of a lower rate if market conditions improve before their loan closes. Essentially, it offers the best of both worlds: protection from rising rates and the potential to benefit from falling rates.
How Much Does It Cost to Float Down a Rate?
The cost of a float-down rate lock can vary depending on the lender and the specific terms of your mortgage agreement. Typically, there may be a fee associated with the float-down feature, but this fee may be outweighed by the potential savings if rates drop. Your mortgage lender will provide you with details on the cost and conditions of their float-down option, so be sure to review these details carefully before committing!
What if I Lock in a Rate and It Goes Down?
When you opt for a float-down rate lock, you initially secure a rate that is favorable at the time of locking. If interest rates decrease before your closing date, you have the option to “float down” to the lower rate, potentially saving you money over the life of your loan. This can be particularly beneficial in a volatile market where rates may fluctuate.
With Pulte Mortgage, our extended rate lock options may include a one-time float-down feature, giving you the flexibility to adjust your rate once market conditions change before your home closing. This can provide you with added peace of mind as you navigate the homebuying process. Please be aware that a float-down rate lock may not be available and you should speak to your lender to determine availability.
If you’re considering this option, be sure to discuss it with your mortgage advisor to determine if it’s the right fit for your financial goals and homebuying needs!
