What does Floating Your Interest Mean
When you are applying for a mortgage whether it is for a refinance or purchase you will be posed a question on whether you should lock your interest rate or float it. When you lock your interest rate it cannot change for a fixed period, normally 30 or 45 days, regardless of what the overall interest rate market does. This means if rates go up you have your rate locked. If rates go down that means you do not get the lower rate. When you float your rate, you are subjecting yourself to market fluctuations.
For example, when you apply and the interest rate as of that day is 6.5% for example and you decide to float your rate you are hedging the market and hoping that rates will stay the same or go down. If they go up, you will not be happy.
In today’s volatile interest rate environment, it is almost always the wise choice to lock in your rate because you can always refinance your mortgage to a lower interest rate down the road.
Please speak to a trusted mortgage advisor such as the Home Loan Advisors at Hall Financial to learn more about what your options will be when you are ready.