What is the difference between "locking in" an interest rate and "floating"?Mortgage rates can change from day to day and can even fluctuate during any given day. If you are concerned that interest rates may rise during your loan processing period, then you can "lock in" the current interest rate (and loan fees) for a short time, usually 60 days. The benefit of "locking in" a rate is the security of knowing the interest rate is locked and if interest rates should increase, your "locked in" rate will not change. However, if you are locked in and rates decrease, you may not necessarily get the benefit of the decrease in interest rates. If you choose not to "lock in" your interest rate during your loan processing period, then you may "float", or hold off "locking in" until you are comfortable about the rate. You do take the risk of interest rates increasing during the time of your application to the time the rate is locked in. The downside is that you are then subject to the current higher interest rates. The benefit to "floating" a rate is if interest rates were to decrease, then you would have the option of locking into a lower rate than if you had already locked in the rate. Predicting the movement of interest rates is very complex since the movement of rates is usually based on subjective, rather than objective, criteria. Your broker can help you decide whether you should "lock in" or "float" a rate. |
We Say "YES" When Others Say "No" 857-205-1068 Centurion Funding Corp. of America 162 East Main St. Avon, MA 02322 |
|
Copyright © 2006-2008 EZ Mortgages & Loans Designed By TeleLance.com for Mortgages & Loans in Boston Listed By www.BostonCatalog.com in Mortgage categories Links |