What can save you $1000s over the life of a loan? A Float Down.
If you’ve never heard of it, it’s not your fault. Very few mortgage brokers provide Float Down’s, which makes them very rare…but lucky for you, I do.
Locking in an interest rate means getting a guarantee on a certain market day for a certain interest rate for a certain period.
For example, locking in on a Monday for a 30-year fixed rate for 4.5% for 45 days. This means that if interest rates are higher on Tuesday, you are protected from the increase in rates because you “locked in” – you are guaranteed that if your loan funds on the 45th day you get that rate no higher.
But how do you decide when to lock in? What if rates go lower on Tuesday? Should you lock in now or wait?
You want the lowest rate, but you also don’t want to gamble with such a huge debt.
Most banks are lock you in and done, meaning once they have given you that guarantee (lock in) they don’t revisit or keep watching for your benefit. In fact, one client said that on a previous loan they asked their Big Bank if they could get a lower rate while they were already in process for applying for a loan. The Big Bank of course said, “No. We gave you the guarantee and we cannot change it.”
This makes no sense because in this case the interest rate was 0.5% lower than when the client locked in. They went down the street and started over with a new bank for that lower rate.
I however can lock you in AND if interest rates go down by more than 0.25%. We can close in 15 days when we give you the lower rate. In other words, you are protected but still able to benefit from the lower rates. YEAH!
Once I lock you in, I keep watching rates for an even lower rate. I remove the guess work and worry around whether to lock or not while giving you the ability to still get a lower rate within the period in which you need the loan (refi versus purchase escrow which has a deadline).
That’s exactly what Roberto was able to do. He locked in his rate at 4.875% on November 5th. His loan was approved on November 29th AND on December 7th we “floated him down” to 4.5% and will close next week. No extra fees for this option. He will save $90 per month for 30 years or however long he has the loan.
That’s the Power of the Float Down.