Mortgage Rate Lock Float Down


DEFINITION of 'Mortgage Rate Lock Float Down'

A mortgage rate lock with the option to reduce the locked interest rate if market interest rates fall during the lock period. A rate lock with a float-down option can provide the borrower with security against an increase during the rate lock period, while the float-down option allows the borrower to take advantage of a fall in interest rates during the lock period.

BREAKING DOWN 'Mortgage Rate Lock Float Down'

As with any financial option, float-down options on a rate lock have a theoretical value or cost; therefore, rate locks with a float-down option are more expensive than rate locks without. The option will only be exercised by the mortgagor if interest rates fall.

  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Mortgage Rate Lock Deposit

    A fee that a lender charges a borrower that allows the borrower ...
  3. Mortgagor

    An individual or company who borrows money to purchase a piece ...
  4. Mortgage Originator

    An institution or individual that works with a borrower to complete ...
  5. Mortgage Rate Lock

    An agreement between a borrower and a lender that allows the ...
  6. Mortgage Broker

    An intermediary who brings mortgage borrowers and mortgage lenders ...
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