Locking the Rate vs. Floating the Rate: Whats the Difference?
Another issue that you could discuss with your mortgage broker is whether you want to “lock the rate”, or “float the rate”. Mortgage rates can change on a daily basis. When you apply for your mortgage, your mortgage broker will give you the option to either lock in a rate or float your interest rate. If you lock in your interest rate, the interest rate that your mortgage broker quotes you on the day that you complete the application for your mortgage will be the interest rate that you will receive on your mortgage at the closing. If you float your rate, the rate that you receive on your mortgage will be the mortgage rate at the date of closing. Obviously, your decision as to whether you lock in a rate or float the rate will be based on your estimate as to what will happen with interest rates between the date you make application for your mortgage and the date that you actually close on your home. If you have a strong feeling that interest rates will decline during that period, obviousl
