My lender is pushing a float-down? What's the fine print?

What's the fine print on float-down options?

Your lender is offering a float-down option, which lets you lock in a lower rate if rates drop after you've already locked. Float-downs typically come with fees and specific timing windows, so you want to understand what you're paying for.

Float-down options commonly cost 0.125% to 0.25% of your loan amount upfront. The lender sets rules about when you can use the float-down—often rates need to drop by at least 0.25% from your original lock, and you usually have a specific window to request the lower rate. Some lenders offer one-time use, while others allow multiple float-downs during your lock period.

Check the exact terms: how much the fee costs, how much rates need to drop before you can use the float-down, and what timeframe you have to request the lower rate. Ask if the fee gets credited back if you don't use the option, and whether there are any other restrictions.

You can pay the fee for the float-down protection, decline the option and keep your current lock, or shop with other lenders to compare their rate lock policies. Share the float-down terms with the lender and they can walk you through the specific costs and timing requirements.