Lenders who offer Rate Relock?

Question

Hi

I work with Third federal and they have an amazing feature of rate relock( which is not refinancing) in that they basically you can request for rate to be changed(when it drops) but paying $295( or lower when they have promotion) - this way we dont end up paying high closings associated with refinancing. They also remortize the loan so the period doesnt start again but continue( kind of restructuring the loan). This really helps as you can keep reducing the rates as and when it goes down so even though its ARM you get to enjoy lower rates (perhaps forever)..

I was wondering if there are any other similar lenders who offer this type of feature.  I would love to work with Third federal again but looks like they cannot help those who has more than 4 loans( and I have 5 :( ) .

Pradeepan V. · Answer

Thank you sir. I havent seen any lender offering this feature( perhaps we need to specifically request it and its upto them to approve it or not or might put certain conditions. But looks like they offer it only when it drops to certain rate. Wonder why not many customers are not using it( for example: The rates are super high right now in 5.5% range when it drops to 3% will the lender change the rate(without refinancing it and without any conditions(like inability to make payments, losing a job, health conditions etc?) Third federal offers this at any point of time with no conditions.

and second one is not recasting or restructuring as I am not paying principal down - Third federal does this reamortization/recasting simply because of rates being readjusted( They just changed my monthly payments but kept the term the same since the interest rates changed)

Dave Skow · Answer

Many lenders  will allow a  rate  lock float  down  if the market  rates   drop to a certian  point that  is lower than a  locked rate ....I think your 2nd point is decribing  either 1) a  " recast " of a loan ( which is  the ability to  make a  large  prin reduction and have the payment  reamortized with keeping the terms the same   or   2) allowing an  ARM  loan to  have the rate/ payment  reamortized  at regular   adjustement  periods  .....most lenders   offer these  too