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Are you looking to lower your mortgage payment without refinancing? Ever since mortgage interest rates increased, a lot of homeowners have been hesitant to refinance and take on a higher rate. Fortunately, there’s a way to lower your monthly payment you may not have heard of: Recasting. Essentially, recasting is putting a lump sum towards your principal balance to lower your monthly payment without actually changing the terms of your loan. This is an amazing option in this current environment, but most people don’t know about them. That’s why today, I’m sharing what recasting is, how it works, and its key benefits:
1. How recasting works. Like I said, recasting is essentially a lump sum payment on the principal balance of your loan. Most lenders require a minimum payment of $5,000, but you can go over that amount if you have the cash. The fees are usually very minimal; depending on location and lender, this will only cost you from $100 to $1,000. While this is a great option, keep in mind that you’ll need to make a separate call to get rid of private mortgage insurance.
2. Who should consider recasting? First, you should know that recasting is only an option for people with a conventional loan. However, if you qualify, I recommend recasting if you come into a large sum of money. For example, an inheritance, year-end bonus, or tax return are all great opportunities to recast your mortgage. This way, you can spread out a one-time cash infusion over the life of your loan and benefit from the savings in the long run.
3. The key benefits of recasting. Recasting is perfect for homeowners who want to stay in their properties but don’t want to refinance. Since a lot of people have locked in great interest rates from the pandemic market, they don’t want to refinance and end up with a higher interest rate. If you’re in this position, recasting is the perfect option to lower your monthly payment and increase your savings long term.
So is recasting right for you? If you have the cash on hand, you qualify, and you don’t want to move in the next few years, I highly recommend it. Whatever your situation is, I’m here to help. Don’t hesitate to call me about recasting, refinancing, moving, or anything else you might need. I look forward to hearing from you!
