What is a float or lock option?
These terms are mortgage loan terms for “are you a gambler?” When you make application you will be asked to make the decision if you want the rate offered at that time that is, the lock rate or gamble on whether the future will offer lower rates that is, the float rate. If you lock your loan and rates increase, you are protected. Once you lock, if rates decrease, you will not get the lower interest rates. If you think rates are going lower and you dont mind the risk, you would want to float. This means you are at the mercy of the market until you lock. You can usually lock at any time and must do so eventually so that you can close on your transaction. Some important tips on floating and locking: If you are the nervous type lock. Once you lock, your lender promises you that rate. Make sure you ask your Loan Officer for confirmation in writing, so you won’t have any misunderstandings later. If you choose to float, you are responsible for watching what interest rates are doing, and must
