Quote from @Dave Skow:
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
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)
