Origination ActivitiesQuestion 257 of 400
A borrower is quoted a 'float-down' option on their rate lock. What does a float-down provision allow?
a.The lender to raise the rate anytime before closing
b.The borrower to switch to an adjustable-rate loan for free
c.The borrower to obtain a lower rate if market rates fall during the lock period, usually for a fee
d.The borrower to skip the appraisal
Explanation
A float-down option lets the borrower take advantage of a lower rate if market rates decline during the lock period, while still being protected if rates rise. It typically involves a fee and specific terms, and it is unrelated to appraisals or loan type changes.
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