To Cast or not to cast?
Mortgage Loan Recasting: Does it Make Sense to Reamortize?
A mortgage recast allows you to put a lump sum toward the principal
balance on your mortgage to reduce your monthly payments. If you were to
do this, your term and interest rate would remain the same. Recasting
helps you to pay less on your monthly payments for the remainder of the
loan without the need to refinance and can usually be completed in less
than 60-days!
Deciding whether to recast your current mortgage requires you to evaluate
the pros and cons before making your decision and be sure to have a
conversation with your lender so you fully understand the process.
Recasting typically offers two main benefits: 1) Lower Monthly Payments
and 2) Paying Less Interest.
Just remember, recasting has absolutely no impact on the length of your
mortgage. So if you recast 7 years into a 30-year mortgage, you will still
have 23 years left on your term and your interest rate remains the same.
If you have an interest rate of say less than 4%, this could work out
really well for you. If you're interest rate is higher, it may actually
make more sense to refinance. Once again, your best bet is to consult with
your lender. Many of my clients have worked with
Deana Hollstein at Home Mortgage Advisors (formerly
Home Mortgage Alliance) to recast their loans and have saved tens of thousands
of dollars leveraging the power of this little-known mortgage tool.
