What is the difference between “locking” and “floating” loan rates?

  • Locking ensures that your loan pricing will be unaffected during the lock-in period by giving you a specified period of protection from financial market fluctuations in interest rates.
  • Locking sets the range of pricing available to you; it doesn’t guarantee that a specific rate will apply.

Your final rate, which may not be determined until closing, will reflect the pricing that was available at the time you locked.

  • Floating – or not locking – means your rate will fluctuate with the up and down movements of the market.

The benefit to floating is that if interest rates were to decrease, you would have the option of locking in at a lower level of rates.