You are right. It normally means "tener una corazonada" (to have a hunch), and it's quite common in Mexico. Actually, there is a government lottery game that is called "Melate", precisely because you trust your hunchs to choose a combination of numbers which are sorted three days a week, I think.
- A mí me late que va a llover. = Tengo la corazonada de que va a llover.
I think it's going to rain.
- Si te late que está mal, no lo hagas. = Si tienes la corazonada de que está mal, no lo hagas.
If you feel that it's wrong, don't do it.
But sometimes, it means that you want to do something:
- Juan dijo que le latía hacer algo nuevo y renunció a su trabajo.
Juan said he felt like doing something new and quit his job.
- Me latió mandar el currículum a esa empresa y me ofrecieron un mejor trabajo.
I thought it was a good idea to send my résumé to this company and they offered me a better job.
- Si te late irte de viaje y puedes pagarlo, no lo pienses.
If you really want to go on a trip and can afford it, just do it.