This is where the lender will lower the monthly P&I payment should the borrower wish to put more money down on the principle post closing.
>> This is done without having to refinance and can be a good alternative to a Bridge loan.
Generally for around $400 to $500, when the borrower sells another property or just wants to put at least $20k towards their principle, some lenders (NOT all) will "RECAST" the loan to the lower P&I monthly payment.
However, most Loan Originators don't know what it is, so you may need to school them.
And if realtors understood how it works, they'd be able to sell homes to buyers who wish to upgrade in home, but need the proceeds from the sale of their current property to keep their payment in at a certain amount on the new purchase.
Anyone know of any lenders who offer this?
@Steve McRory very few lenders offer this option. I work out of one of that lender.
Is this akin to "buying down points"?
completely different animal