Float if the market is headed down- Interest rates on home and construction loans are federally determined. Just like the stock market, interest rates are constantly changing. In fact, interest rates are partially determined by the stock market. Float-down allows you to take advantages of market fluctuations. You can lock into your permanent rate at any time during the 60 days prior to completing your home. If interest rates are expected to drop, using the float option is the best option. The down side of this is, if the interest rates only increase during that time period, you will be forced to lock in to the higher rate and the float option will be the worst option. The key to knowing what to do is to find out what the market has been doing at what the interest rates are predicted to do.

Lock in at the right time-knowing when to lock your rates is similar to knowing when to fold `em at the poker table. You want to stay in long enough to get all you can but staying too long can turn against you. The trick to locking your rate in at the right time is finding out everything you can about the market. Playing with float options is very similar to playing the stock market. If you are savvy to the stock market, you will be well suited to take advantage of float in your construction loan.

Check to see if there are floors on your float option-the benefit in a floating rate is that as the interest rates fall, so do your payments. However, some loans with a float have a minimum rate. This does not allow you to take full advantage of what is happening with federal interest rates. There are loans that don't have floors attached to their float-option. Be sure to ask about floosr when you are finding out about the loan.

Rate shop for float options-as you probably are discovering, not all construction loans are created equal. Just like some floats have floors and some don't there are other differences too. Float options are widely variable and what you may pay for through one lending agency might be gratis from another. If you have decided that you would like a float option on your construction loan, find a lender that offers the option at no cost. Many loans offer you the opportunity to purchase a float option. Try to find a loan or a lender that offers the floating interest option at no charge. Shop around for the best deal.

Finally, if you can find a 90-day option, take it-most floats require you to lock in within 60 days of completing your home but there are some loans that allow you to lock in within 90 days of completion. The more float time you have, the better able you will be to take advantage of the opportunities float provides.