Lock or Float?

In today’s market update, we’re going to be talking about a very important concept. Lock or float, and why it is very important to you, the consumer or a realtor working with a client that’s about to close. 

First, what does it mean to lock?

When you lock in your interest rate, you’re securing a specific interest rate for a specific amount of cost for a specific amount of time. Typically 15, 30, 45 or 60 days, and in some cases, even more. The longer you lock, the longer the duration, and the more it costs, from an out-of-pocket perspective, that’s the lock side of it. 

Now, what does it mean to float?

You’re not locking in your interest rate because you believe by the time the loan closes, the rate will trend down. So you’re waiting for that opportune time while working with your mortgage professional to secure and lock your interest rate at the lowest point in general.

With where the markets going now, and some of the different key indicator reports coming out later this week, we at RCG feel if you have a purchase closing in the next one or two weeks or if you have a client closing on a purchase in the next couple of weeks, it’s the perfect time to lock.

If you’re not closing for the next month or few months for whatever reason we definitely vote a hundred percent on the float boat.

As always, please consult with your mortgage professional as it relates to locking your interest rate or floating.