The "Secret" Mortgage Hack Smart Homeowners Use
A mortgage recast, or re-amortization, happens when you make a large lump-sum payment toward your mortgage’s principal. Afterward, your lender recalculates your monthly payments based on the lower balance.
When you recast your mortgage, you lower the remaining principal. Your lender then spreads this new balance over the rest of your loan term, keeping your original interest rate. This means your monthly payment goes down, but your interest rate and loan end date stay the same.
Benefits of a mortgage recast:
Lower monthly payments: The main advantage is that your monthly payment drops, which can give you more room in your budget.
Less interest paid over time: Paying a big chunk of your principal early means you’ll pay less interest over the rest of your loan, which could save you thousands of dollars.
Keep your current interest rate: You keep your existing rate. This is helpful if your rate is lower than what you’d get by refinancing now.
Simpler and cheaper than refinancing: Recasting usually involves less paperwork and lower fees because you’re not taking out a new loan.
Why consider a recast: If you get a large sum of money, like a bonus, inheritance, or money from selling a home, a recast can be a smart move. Unlike just making extra payments, a recast officially lowers your monthly payment right away, letting you use that lump sum to reduce your financial burden without the hassle or cost of a new loan.
In summary, a mortgage recast is a smart way to lower your monthly payments and total interest by putting a large payment toward your loan’s principal. It helps you make your mortgage more affordable and efficient, without the extra steps of refinancing.
Note:
We have a lender in our portfolio that offers Unlimited Recasts – get unlimited recasts at no additional cost.
Varies per lender, but processing takes up to 60+ business days from date of request.
Must be conventional (Fannie Mae, Freddie Mac).
Recast fees vary per lender from $150 - $400+.
A great first step is to find an experienced mortgage broker that has the mortgage products and experience to help you achieve wealth through homeownership. He will partner with you throughout the process, providing guidance and educating you on loan products available, as well as evaluating the costs involved. Understanding your options and the costs allows you to make an informed decision on the most beneficial path forward for your specific home purchase or refinance.
Simplicity Mortgage is here to help. We have the experience and loan products to close you quickly and confidently! Contact me today to discuss your real estate goals! 386-401-9000
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