"Float-down"

A rate lock, plus an option to reduce the rate if market interest rates decline during the lock period. Also called a cap. A float-down costs the borrower more than a lock because it is more costly to the lender. Float-downs vary widely in terms of how often the borrower can exercise (usually only once), and exactly when the borrower can exercise. See What Is a Float-Down? Do not confuse with interest rate increase caps and payment increase caps.

Mortgage glossary and terms by letter

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