Recast Mortgage: Adjusting Your Loan without Refinancing
Be it economic hardship, changing financial circumstances, or missed payments, Recast Mortgage can help you adjust your loan without the need to refinance. Find out how a recast mortgage works in this helpful article.
What is a Recast Mortgage?
A recast mortgage, also referred to as loan recasting, is a way of lowering your monthly mortgage payment without refinancing. It involves making a lump-sum payment toward the principal balance of your loan. Once you have made the lump-sum payment, your lender recalculates your loan payments over its remaining term. The result is a reduction of your mortgage balance and a decrease in your monthly payments.
Benefits of Recasting
Recasting has many benefits, the most notable being that it eliminates the need to refinance your loan. Refinancing can often come with closing costs and other fees, which can make it an expensive process. With recasting, however, there are typically no fees or closing costs, so the savings can be significant. Additionally, recasting allows you to keep the same interest rate that you had on your original mortgage, while lowering your monthly payments.
How to Recast Your Mortgage
Recasting a mortgage can be a straightforward process. The first step is to contact your lender to see if they offer the service. Once you have confirmed the availability of the service, you can make your lump-sum payment toward the principal balance of the loan. You may also need to submit additional documentation, such as proof of income and other financial documents. Once your recast request has been approved, your lender will recalculate your mortgage based on the new balance.
Things to Consider Before Recasting
Recasting can be a great way to lower your monthly payments, but it's not right for everyone. Before you recast your mortgage, make sure that you have enough financial stability to be able to make the lump-sum payment in the first place. Additionally, make sure that you are comfortable stretching out the life of your loan in order to save money in the long run. Recasting can be a great tool to help you save money, but it's important to make sure it's the right choice for your situation.