Were not talking about fishing here, but we are talking about saving money! And who doesn’t want to save money? Recasting your mortgage is an easy way to save money if it makes sense for your loan and situation.
So how does a Mortgage Recast work? When recasting, you would put a lump sum of money down towards your principal balance on the mortgage loan. Then, you ask your lender to recast the mortgage. Once this happens, your interest rate and term stay the same, but your loan balance and monthly payments become smaller.
It is important to know that not everyone can recast. If your FHA, USDA, or VA loan is government backed by Ginnie Mae you will not be eligible to recast. Jumbo Loans aren’t usually qualified to be recast either. Also, some lenders don’t allow recasting as an option for their lenders. If a lender does allow for a recast, it can take up to 2 months to complete.
Each lender has different guidelines for a mortgage recast. For Loan Pronto, we require that the borrower puts down at least $10,000 or more over a 12-month period of time. When you do you a recast through us, it only costs you $100 and you can recast your mortgage as many times as you want!
There are 2 main benefits to recasting your mortgage. Since you used a large sum to significantly reduce your principal balance, you will end up paying much less interest in the long run. Secondly, you have a lower monthly payment and lower principal loan balance to pay off over the life of the loan, all while keeping the same interest rate. Having a lower monthly payment gives you extra money each month to save or put towards other expenses.
Thinking of saving money by recasting? Give us a call today to go over options! 704.602.2446
Take a look at our checklist to see the basic documents you’ll need to apply.