Float Down: Lower Your Interest Rate After Locking

Orange County, CA – Many borrowers hold off locking their interest rate in the hopes that it will drop. It’s a gamble. No one has a crystal ball. By speculating on interest rates decreasing they also leave themselves open to interest rates increasing. A higher interest rate means a higher monthly mortgage payment. A question that I’m commonly asked is, “If I lock my rate now and rates go down, can I get that rate?” In most cases the answer is no, unless rates drop significantly and specific terms are met or you start from scratch. But we have the solution to that problem with our famous float down option.

Our float down option is available on most loan programs. It allows borrowers to lock in today’s interest rate. If rates drop later on, we’ll float down that rate to the current market. This tool protects the borrower against upside movements in the market while giving them the benefits of downside movements in the market. Best of all, we do this at no additional cost to the borrower.

So how does it work? It’s simple. After locking the rate, the borrower will submit a float down request form. Exercising the float down options carries an internal cost. Therefore we require the appraisal and loan approval prior to exercising the float down. Once the appraisal has been reviewed and the loan approved, the the float down window is open. The borrower can float down one time within 20 days of closing. Once the loan documents have been requested the float down can no longer be applied. The rate drop can be as little as .125%. There are no minimum requirements or extra charges for this benefit!

Why is this so important? Picture this: A buyer is moving along nicely with a home purchase. Appraisal is in and all of the inspections are complete. The underwriter has approved the loan and you’re close to requesting the loan documents. Then the market drops by .250%! The buyer wants the lower rate since they’ll save a considerable amount of money over time. Without a float down option, the buyer would have to switch loan programs, re-lock and start fresh. In many cases, buyers have to switch lenders completely. This can be costly for all parties involved. If the contract is close to expiration then it may fall out of escrow. The float down option eliminates this dilemma for borrowers and agents.

If you could guarantee your interest rate wouldn’t go up but could still go down, wouldn’t you choose that option? Volatility is prevalent in today’s markets. Volatility is the unforeseen turbulence that can flip a transaction on its head. Unless the float down is not offered on a specific loan program there really isn’t a good reason not to use it. It’s a win-win.  So, eliminate volatility in your life. Eliminate the stress and worry that come from gambling and the remorse that comes if rates do drop while you’re in contract. Enjoy peace of mind and take advantage of the famous PrimeLending float down option.

Scott Storace

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