Lock Or Float Interest Rate

by Wanda in California, USA

Regarding Lock Or Float Interest Rate: Hi Kate, I live in California and am supposed to close on a condo at the end of November that is being constructed. The developer has a relationship with a lender that will allow me to lock in an interest rate now for 1 percent of the loan price (keeping 25 percent of that at the end for their fee).

It seems as though their interest rates are a little higher than what I've seen from other lenders - I know typically the rate can be higher for a longer lock, but their 30 day rates/locks are higher.

They're also offering 1.5 percent discount on home price and $2500 off closing costs if I go with them. I'm trying to decide if I should just lock now or keep floating in hopes that rates don't move tremendously higher by November with the option then of going with another lender and giving up the "perks" this particular lender is offering (for potentially a lower interest rate).

What would you suggest? Should I lock or float my interest rate?

Kate Answers: Lock Or Float Interest Rate

Dear Wanda, I can't wait till you try this strategy! Think of playing with balloons when you were a child. Squeezing one end made the other side bulge. Just like a balloon, the lower your mortgage interest rate, the higher the mortgage fees. Conversely, the higher your interest rate, the lower the mortgage fees should be.

More on this strategy at Little Known Secrets To Reducing Mortgage Closing Costs

Think about this too! Consider if paying discount points is in your best interest (or not) at My Best Mortgage Advice On Buying Points

Now shifting gears to locking your interest rate. Learn why you MUST get your lock in writing at Mortgage Broker Fees and vital questions to ask BEFORE deciding to lock or float your interest rate.

Take a moment to bookmark Lock Or Float My Interest Rate to your favorites and visit often for more mortgage rate lock tips. You can also invite friends to comment on this page or ask another question of their own like you did.

Best Wishes,

Ask Kate how to get the best mortgage rates
Ask Kate

P.S. Go to my Best Mortgage Rate Blog, an entertaining source of mortgage information. Subscribe now to the RSS feed.

Return from Lock Or Float Interest Rate to Get Your Best Mortgage Rate

Comments for Lock Or Float Interest Rate.

Click here to add your own comment.

Wanda You Are Welcome
by: Kate


So nice to hear from you and I'm glad it was helpful. As your transaction progresses, please feel free to ask more questions.

Best Wishes, Kate Ford

by: Wanda

Thanks, Kate - this was helpful.


Click here to add your own comment.

You can also ask Kate about your mortgage at Ask Kate About Buying a House.

Recent Articles

  1. Kate's Mortgage Rate Report August 11: Rates Bouncing Like a Ping Pong Ball

    Aug 11, 16 10:49 AM

    Kate's mortgage rate report for the week ending August 11, 2016: Rates Bouncing Like a Ping Pong Ball
    Mortgage interest rates have been bouncing like a ping pong ball: After last Friday's strong job report began pushing up mortgage rates, the market is now hinting at a reversal, with the 30-year hover…

    Read more

  2. Ask Kate how to avoid unauthorized mortgage rate extension fees

    Aug 11, 16 10:18 AM

    Ask Kate how to avoid unauthorized mortgage rate extension fees
    Ask Kate how to avoid unauthorized mortgage rate extension fees:

    After locking in her rate, the bank sent a Texan homeowner, Laura, notification of several thousand in fees that she must pay in order…

    Read more