What is Float-Down?
A float-down is an option in a rate lock that lets you lower your interest rate if market rates drop during the lock period, usually for a fee and subject to conditions.
A float-down is a provision in a rate lock agreement that allows you to get a lower interest rate if market rates fall after you lock. It is not automatic; you typically must pay a fee or accept a slightly higher initial rate. Some float-downs are one-time only, while others allow multiple adjustments. Borrowers consider a float-down when rates are volatile and they want protection against rising rates but also a chance to benefit from falling rates. Watch for expiration dates, the required drop in rates to trigger the float-down, and any cost. Not all lenders offer float-downs, and terms vary widely.
Written by Ralo's editorial automation and checked against the site's copy rules.