What does it mean to float a rate?

you have the option to lock your interest rate or let it float & lock it later if you think it will go lower. Most of the time, you're better off locking.

Mortgage interest rates, most of which are basically tied to the mortgage bond market, fluctuate all day long. When a lender quotes you a interest rate, that rate is immediately subject to change with the market conditions. The quote could be valid for days, or just minutes. Floating a rate simply means you have NOT "locked" your rate, and you are subject to markets changes. Your rate could go up, or it could go down. No one really knows. Lenders also allow you to LOCK your interest rate. Once you lock, your interest rate is chiseled in stone. If rates go up, you are protected from the higher rate. If rates go down, you DO NOT get the lower rate. Because of this, the decision to lock or allow your rate to float should not be taken lightly, and should be discussed with a Loan Officer who is a NMLS Licensed Mortgage Professional. In Mn or WI, visit www.MnBestRates.com

Typically there are several things that need to be completed on your part in order to "lock" a rate. When an investor locks a rate they take several steps including commiting to lending the money by the specific expiration and hedge their committed lock so that they can maximize their profits. Most often you will need to have completed a loan application and some lenders go so far as to say that you cannot lock until your loan is approved. You may decide to FLOAT if you feel that you can get a better rate. Advice here is that if you like the rate and terms, lock in! Check out my web site www.rglovermortgage.com for the lastest on the markets and whether locking or floating is prudent. You'll find that I recommend floating most of the time but when the market turns, it will turn hard and fast and you want to lock in prior the change in pricing.

Great question! Floating the interest rate is a simple way of stating that you are not going to lock your rate in at the current time and you are going wait to see what market conditions do. This is essentially gambeling and sometimes you can win, but most times you will lose because the market is so volatile and changes so sporadically throughout the day! I always tell my clients that if they are happy with the rate that is presented to them then don't get greedy and lock it in because rates fluctuate all day long and sometimes they can get real ugly fast yet they can also get real good fast for a short period of time. The bond market is what mainly dictates interest rates so if you want to check out the market as it plays out the best place to go would be www.yahoofinance.com and watch the 1 month treasury bond avg. if the average is positive then rates are getting better, if the average is negative then rates will decline. Let me know if I can be of any service to you in the future in regards to this or any other questions you may have.

Here is a great article on floating rates. http://www.mortgagenewsdaily.com/consumer_rates/207958.aspx

To put it simply, it is indicative that you either have a pre-approved or approved loan and you have not made the lender commit to a rate. A couple of reasons you might "float" are because you think rates are getting better or you don't have a specific time line to close or your time to close may be beyond 60 days.

Simply put, your rate is not locked and "floats" accordign to market conditions.