Floating election, what does that mean…?

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My dad just got his mortgage committment for his new home. On the main page there are two options: Price Range Protection and Floating Election, the loan officer checked “Floating Election” but what does a floating election mean

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  1. Reply
    Glynis
    February 9, 2011 at 9:30 am

    It means that he can float or ride the interest roller coaster until a good one. At which point the broker will lock the interest rate. The float is usually for 30 days. It is in your father’s best interest to float as he will get the best interest rate. In the last few weeks rates have swung in both directions by as much as a half percent.

    Price Range protection is locking a rate for a given period which is generally 60 days. This guarantees the rate at which you lock is the rate of the loan. But as I stated, rates are swinging wildly.
    The float election is the best option to get the best rate. I hope he is using a broker and not a bank.

    A broker has a variety of lenders and he can make sure that the float gets held amongst the many lenders he may use. A bank will only use their rate with which to lock, which because they are selling you the loan could mean they might not be to eager to give you a good rate.

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