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What's a float down option?

by matteastman from Agate, North Dakota. Jun 25th 2013 Reply


Dave Metsker (DaveMetsker)
#37 ranked lender in Oregon - 2,317 contributions

If you lock your loan at an interest rate of say, 4.25%, and rates drop to 4.0%, you can take advantage of the lower rate, during the original term of your lock.

Jun 25th 2013
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Hans Bruhner (Hans Bruhner)
#132 ranked lender in California - 119 contributions

Dave has the basic answer but the bonus portion is that some lenders charge a fee for this and you need to read the rules as to how it can apply to your situation. The majority of lenders do not offer float down options today and with rates the way they are, if there is a fee for float down it my not be worth it.

Jun 25th 2013
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Joe Shamie (Joe Shamie)
#4 ranked lender in New Jersey - 1,412 contributions

Dave is right. However, depending on the lender, you need to find out if there is a cost associated withthe float down AND you can usually only do it once during the term of the origianl lock. So if you float down from 4.25 to 4 and rate fall further, you cant float down a second time

Jun 25th 2013
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Carlo Sanchez (MortgageLendingPro)
#0 ranked lender in Utah - 1,163 contributions

LIke the others have stated but you compare the cost to doing the float down to the interest rate dedcution to how how long you will be in that loan to see if it is financially feasible to do so.

Jun 25th 2013
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Carlo Sanchez (MortgageLendingPro)
#0 ranked lender in Utah - 1,163 contributions

LIke the others have stated but you compare the cost to doing the float down to the interest rate dedcution to how how long you will be in that loan to see if it is financially feasible to do so.

Jun 25th 2013
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Elden Lewis (elewis_409_299)
#41 ranked lender in Indiana - 223 contributions

Dave has the basics right and Joe and Hans pretty much clarified the definition. The bottom line is to read the fine print when you lock these types of loans there are variations from lender to lender.

Jun 25th 2013
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Jason Vondrak (jvondrak)
#220 ranked lender in California - 1,741 contributions

A float down option gives you the ability to float down once during your lock period if interest rates get lower. This option may come with an additional cost.

Jun 25th 2013
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Peter Botros (PeterBotros)
#70 ranked lender in New York - 895 contributions

Gives you the option to lock in at the current rate but also has the ability to change to a lower rate should rates drop. Usually have stipulations and/or cost associated with them.

Jun 25th 2013
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William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

Some lenders offer a "Float Down" option. Some charge for the option, and others don't. how this works is you apply for a loan, and it's been submitted and you have locked in your rate. However if rates happen to drop by .125% or more before you close, you are allowed one time to relock at the lower rate, however your still protected if rates increase. .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Jun 25th 2013
1
0
Peter Botros (PeterBotros)
#70 ranked lender in New York - 895 contributions

Gives you the option to lock in at the current rate but also has the ability to change to a lower rate should rates drop. Usually have stipulations and/or cost associated with them.

Jun 25th 2013
0
0
James Mazzola (Mazzola)
#110 ranked lender in New Jersey - 313 contributions

depending on the lender, you need to find out if there is a cost associated withthe float down AND you can usually only do it once during the term of the origianl lock. So if you float down from 4.25 to 4 and rate fall further, you cant float down a second time

Jun 25th 2013
0
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,986 contributions

Another item to watch for is that for many lenders, you need to inform them in advance of this for two reasons. 1) because there is often times a cost or fee for the float down "option". 2) Because many times it will effect you initial quote/lock.

Jun 25th 2013
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William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

Some lenders offer a "Float Down" option. Some charge for the option, and others don't. how this works is you apply for a loan, and it's been submitted and you have locked in your rate. However if rates happen to drop by .125% or more before you close, you are allowed one time to relock at the lower rate, however your still protected if rates increase. .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Jun 25th 2013
0
0
William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

Some lenders offer a "Float Down" option. Some charge for the option, and others don't. how this works is you apply for a loan, and it's been submitted and you have locked in your rate. However if rates happen to drop by .125% or more before you close, you are allowed one time to relock at the lower rate, however your still protected if rates increase. .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Jun 25th 2013
0
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Sean McCay (Sean.McCay)
#586 ranked lender in California - 4 contributions

If you lock your loan at an interest rate of say, 4.25%, and rates drop to 4.0%, you can take advantage of the lower rate, during the original term of your lock.

Jun 25th 2013
0
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