Mortgage rates are one of the hardest things to figure out with any certainty. It’s a guessing game at best full of speculations that are based on so many variables the average borrower would find it almost impossible to know when to get the best mortgage rate. At the end of the day however, the most important thing is paying as little as possible on your mortgage. When applying for a mortgage, protect yourself from paying too much in interest fees. Ask if your broker offers a mortgage rate lock float down option.
A mortgage rate lock float down helps ensure you get the lowest mortgage rate even if you’ve locked in at a higher rate. Here’s how it works. Suppose after spending months shopping around for the best mortgage rate you finally lock in at this past summer’s 30 FRM rate of 4.51%. Just a few weeks later you find that rates have dropped to 4.125%. With a mortgage rate lock float down you can still get the new lower interest rate, saving thousands of dollars over the lifetime of your mortgage. However, if mortgage rates increase you are still locked in at the original 4.51% rate that was available when you signed the mortgage.
Here’s why you should consider this option when applying for a mortgage. The difference between a 4.51% and 4.125% interest rate for the term of your mortgage could be as much $16,000. That doesn’t sound like much but why pay the bank more than you have to. A decrease in your monthly output of over $45 is enough to treat yourself to dinner or to a few extra Starbucks.
To avoid the sting of paying more than you have to in increased monthly expenses, a mortgage rate lock float down option allows you to lock in at the lowest rate possible at the time of signing. However, if interest rates fall at any point in the loan application process you can still get the lower rate even though you are locked in.
Remember the responsibility to obtain the lowest rate is yours. If you decide that a “float down” option is for you, be sure to watch mortgage rates carefully and notify your mortgage broker when rates decrease to get the full benefit of this program.
Knowing when you will get the best interest rate is anybody’s guess. However, a rate lock float down is a good tool to use that will help you get the best deal possible when closing a mortgage.
Aurora, a leading financial services company, has funded billions of dollars in loans across the United States and serves clients nationwide in more than 18 states and jurisdictions. A Direct DE FHA Lender, Aurora provides a broad range of financial products and services, including consumer banking and credit, corporate and investment banking. We have access to some of the best loan products in the industry. Leveraging our size and connections, we’re able to offer you the best rates available.
For more information on Aurora Financial, visit www.auroraf.com or call 1-(877) 887-1117.