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How Do Mortgage Broker Float Loan Rates?

By Bob Redtree

How do mortgage broker float rates? Read here to find out how a mortgage broker can float your interest rate!

With interest rates at all-time lows, now is one of the most affordable times ever to buy a home. Since rates could go up soon, you should consider floating your interest rate when looking for a home. Through the use of a mortgage broker, you could get a floating rate lock that could save you thousands of dollars over the course of your mortgage.

Interest Rate Lock

The first step that a mortgage broker takes when floating an interest rate is locking the rate. An interest rate lock is a clause in a preliminary mortgage loan that locks the interest rate at a certain level before you close on the loan. This protects you from the risk of interest rates rising while you are still looking for a home or before you close on the loan. Interest rate lock periods tend to range from 30 to 60 days.

Floating Lock

The second step that mortgage brokers use to float rates is to set in a floating interest lock. The floating lock will be a clause in your mortgage lock that states that if interest rates decrease, you can still obtain the lower rate even if your rate is locked. This floating lock clause will protect you in the event that interest rates decline after you have locked your interest rate.

Lock Jumping

If you mortgage broker is willing to offer you a favorable interest rate lock, but not a floating lock, you still have the option of lock jumping. Lock jumping means that you will switch mortgage brokers in the event that you find a better rate because of improved market conditions. Since you do not have a commitment to the initial mortgage broker, lock jumping comes penalty free.

Related posts:

1. What Is A Mortgage Loan Float?
2. Can A Mortgage Broker Unlock My Current Mortgage Interest Rate?
3. Should I Float My Mortgage Interest Rate?
4. What Happens If My Mortgage Loan Does Not Close Before My Lock Expiration Date?
5. Will A Mortgage Broker Be Able to Find Me A Better Mortgage Rate?