Barry Borrower has a fixed rate loan. After winning big on a scratch-off lottery ticket, Barry wishes to reduce his principal balance by $50,000. After applying the principal reduction, Barry would prefer that his servicer reduce the payment amount and not the overall term. Barry calls his servicer to discuss:
A. A recast
B. An exception
C. Applying for a new loan
D. His frustration surrounding how principal pre-payments remitted against fixed-rate loan balances only reduce the term and not the payment amount
Answer:A
Barry Borrower has a fixed rate loan. After winning big on a scratch-off lottery ticket, Barry wishes to reduce his principal balance by $50,000. After applying the principal reduction, Barry would prefer that his servicer reduce the payment amount and not the overall term. Barry calls his servicer to discuss:
A. A recast B. An exception C. Applying for a new loan D. His frustration surrounding how principal pre-payments remitted against fixed-rate loan balances only reduce the term and not the payment amount