What's a float-down and what terms should I look for in the lock agreement?

What's a float-down and what should I look for?

You're asking about float-down options and what to look for in your rate lock agreement when rates might drop after you lock. A float-down lets you capture a lower rate if mortgage rates fall during your lock period, though lenders typically charge a fee and set specific conditions. Most lenders offer rate locks for 30 to 60 days, with longer periods available for new construction or complex loans. Float-down provisions vary widely between lenders—some offer one-time reductions for a fee (commonly 0.25% to 0.5% of your loan amount), while others allow multiple adjustments or include automatic float-downs at no cost.

Check your lock agreement for the fee amount, how much rates must drop to qualify (often 0.125% to 0.25%), the deadline to request the float-down, and whether you can use the option multiple times. Some agreements only allow float-downs within the first half of your lock period or require at least 15 days before closing. Compare these terms when shopping lenders, since float-down policies differ significantly. Share your lock agreement with your loan officer and they can walk you through the specific terms and costs for your situation.