Lets say you have a 15year mortgage with a payment of $1000 month. Lets say you are 5 years into it. Lets say by making extra principal payments you have knocked the remaining payoff term from 10 years to 5 by making those extra payments.

What are the chances of going to the bank and asking to lower the monthly payment so that the payoff term will go back up to the 10 year.

I know it could be refinanced. Just wondering if they would be interested or willing to readjust the payment amount to simply extend the payoff period.

What are the chances, zero or maybe or yeah, they should do that?

In my opinion, the lender has ZERO motivation to adjust the terms of the agreement. If as a borrower, you desire different terms, it is your option to complete one transaction and enter another.


Edited to add:

It would also potentially depend on the terms of the loan. Are there prepayment penalties etc.?
The lender went into it expecting $X over a certain amount of time. Unless the proposed changes get them back to $X or $X+, what motivation do they have?

quote:

I know it could be refinanced. Just wondering if they would be interested or willing to readjust the payment amount to simply extend the payoff period.

I don't think they can. It's not in the contract.

The terms of your contract say you have to pay X, (and in your case) as much more than X as you would like. But you have to pay a minimum of X regardless of how much is owed.

If you wish to change those terms you'll need a new contract (refinance).

theyd make you refi so they can get more fees.

I don't know if the bank will adjust the payment down. You can, however, refinance the loan to do the same thing.

You would have to refinance to change the terms of the mortgage. They won't let you do what you're asking.

Zero.

As others have said, they legally can't do that. You would have to refinance the balance with new terms.

Very few banks make mortgage loans for themselves. Virtually all are sold to the secondary market into loan pools. Sometimes the originator retains servicing, sometimes not.

The ability and willingness to modify terms is greatly restricted.

For a run of the mill residential loan, I wouldn't expect any bank but the smallest of local Banks to entertain the request; it would, at a minimum, require an amendment to your note and possibly the mortgage instrument, and there would be the expense of a title search or updated title policy, recording fees, and any legal fees for document prep. In summary, unless you have a very, very big loan and you're willing to cover the bank's costs, they won't be willing to do it. Also, as JAllen points out, if your loan was sold as part of a mortgaged backed security - and it almost certainly was, you can pretty much forget it. You'll need to refinance.

I've gotten commercial loans renegotiated and modified, under the right circumstances, but we're talking loans that are in excess of $10,000,000, and the borrower pays all the lender's expenses.

quote:

Originally posted by Aeteocles:
I don't know if the bank will adjust the payment down. You can, however, refinance the loan to do the same thing.

They won't adjust the payment. The chances of that are zero. They will be happy to refinance the balance to do the same thing.

Several years back I had a mortgage with Citi Bank. I had a 5.25%rate. I had 8yrs left on a 15yr loan.
I guess, due to the HARP program the bank contacted me and offered me a 2% rate reduction (to 3.25%) with no closing cost/ out of pocket expenses. Only rub was they would only write the loan for 10yrs.
I still made the same payment I had been making ( which was higher than my payment due anyway) and I will have my mortgage paid off by next April. My interest every month is only about $25, so most of my $775/mo payment goes right to principle.

Thanks guys. Good response's. I appreciate it. Yes I knew it could be refinanced obviously. The loan as is obviously in great shape as it is spelled out for the person having it.
Wondered if the bank would like to get more interest by accepting a lower payment and getting more interest over a longer period of time. The bank does own and service it in this theoretical senario.

quote:

Originally posted by old rugged cross:
Thanks guys. Good response's. I appreciate it. Yes I knew it could be refinanced obviously. The loan as is obviously in great shape as it is spelled out for the person having it.
Wondered if the bank would like to get more interest by accepting a lower payment and getting more interest over a longer period of time. The bank does own and service it in this theoretical senario.

Probably still a "no." Even if the borrower covered the costs, the additional interest probably isn't enough money to make it worth the trouble for the bank, especially when considering most lenders will not be set up to easily process such a modification. I suspect you will find the lender will insist on a refinance, since they have a streamlined process for the refinance.

No - not without paying thousands in closing costs to refi.

quote:

Originally posted by old rugged cross:

What are the chances of going to the bank and asking to lower the monthly payment so that the payoff term will go back up to the 10 year....

In the banks eyes you still have 10 years left on your loan. You still however have the make the stated monthly payments as part of your agreement.

Thanks guys. The actual details are similar but slightly different in my case. I did check with the lender. The officer did check and while the bank did consider it. Ultimately declined. Which I did understand.

I was just curious how common it might be. I suspected not very.

The loan payment is very principal heavy at this point and the term fairly short. So I should just continue to payoff.

But would like to buy another piece of real estate and could use $100k. Anyone looking to loan on a (secured basis-real estate) at a decent rate and 5-10 year payoff. Amortized at 20-30 years and a balloon payoff?

Email if you wish to discuss.

It’s called a mortgage recast, we did this on our 30yr last summer when we were ahead $50k or so in payments. A lump sum principle payment of $5k was required, plus $175 appraisal fee, but the bank was quick to reduce our monthly payment while keeping the same terms. We of course are still paying the previous amount to get ahead but the lower required payment is nice should something come up.

This is with Chase.

quote:

Originally posted by ridja75:
It’s called a mortgage recast, we did this on our 30yr last summer when we were ahead $50k or so in payments. A lump sum principle payment of $5k was required, plus $175 appraisal fee, but the bank was quick to reduce our monthly payment while keeping the same terms. We of course are still paying the previous amount to get ahead but the lower required payment is nice should something come up.

This is with Chase.

Not exactly. The OP wanted to extend the maturity date of the loan, too, so it's not a simple recast.

*EDITED* - ridja75 has the right of it.

This message has been edited. Last edited by: ShneaSIG,

In a sense SS. We are 5 years in to a 15 year loan. But because we have made consistent principal payments the pay off is about 5 years not ten. I was hoping to have it go 10. Which would reduce the payment since the balance is paid ahead. Just to be clear.

quote:

Originally posted by old rugged cross:
In a sense SS. We are 5 years in to a 15 year loan. But because we have made consistent principal payments the pay off is about 5 years not ten. I was hoping to have it go 10. Which would reduce the payment since the balance is paid ahead. Just to be clear.

Oh, my mistake. That indeed sounds like a situation to have the loan payments recast. It sounds like you already got a negative response from your lender, which is a shame. It seems like many lenders will allow at least one recasting of the loan within the original term without too much of a fuss, provided you have enough of the term left and have paid down a certain threshold amount.