I have a float down option on my loan… when is the right time to take that option? See below…?

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I have a contract on a home and closing is March 25th. I currently have a ceiling interest rate that is protected, but I have one chance to “float down” to a daily rate and take that as my final rate.
The market is so unstable right now that I just don’t know what to do… everyone suspects a drop in rates after the meeting on March 18th (by the federal reserve.) Should I hold out until that day and see what happens, or do you think the mortgage company will drop their rates a day or 2 before?

Any good advice out there?


  1. Reply
    Tony D
    May 16, 2011 at 4:20 am

    Don’t confuse what the Fed does with what the bond market does. Mortgage rates are not set by the Fed action. In fact, rates are higher now than before the recent Fed rate cuts because the bond market has deteriorated. If the Fed cuts in March, mortgage rates might actually go up. If you see a dip in rates that you can take advantage of, jump on it. Don’t get too greedy. Remember, pigs get fat – hogs get slaughtered.

  2. Reply
    Real Estate Guru
    May 16, 2011 at 5:12 am

    Keep in mind, that it’s a gamble, and if those of us that work in the industry knew how that magic crystal ball worked, most of us would be retired by now.

    Never, ever assume that just b/c the Fed rate drops, that it automatically means mortgage rates drop.

    The two are not related. It is the biggest myth that consumers believe.

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