4/14/2024 0 Comments Recast mortgage payment calculator![]() On the other hand, doing a cash-in refinance to reduce your balance would result in $5,000 to $10,000 in closing costs on the new $250,000 loan.Ĭommon Reasons Homeowners Recast Their Mortgages Recasting would cost between $250 and $500. Say you have a $300,000 mortgage and want to reduce your principal by $50,000. Recasting fees are much lower than the closing costs associated with refinancing, which typically run between 2% and 4% of the total loan balance. These fees are flat-rate and consistent regardless of your loan size. The cost to recast your mortgage can vary from lender to lender, but you can expect a processing fee of between $250 and $500. That is, unless you make a single lump sum payment now. This means you probably can’t recast your mortgage if you’ve made incremental extra payments over time. Instead of a fixed amount, some companies may require you to pay a percentage of your unpaid balance, such as 10%. The minimum principal curtailment required for a mortgage recast can vary by lender.Īmong companies that offer mortgage recasts, it's common to find a required minimum principal reduction of at least $10,000. Mortgage recasting involves making a lump sum payment to reduce your loan balance. What is the Minimum Principal Payment for a Mortgage Recast? Conversely, you can consider a cash-in refinance (when you pay in money at closing) with another mortgage provider. This method, however, will not reduce your monthly payments. If your lender doesn’t accept your request to recast, you can still pay down your principal balance. Contact your lender or loan servicer for their policy on recasting. Not all companies offer mortgage recasts. However, just because your mortgage is eligible to be recast doesn't mean your lender will approve the re-amortization. Federal guidelines for these types of home loans prohibit recasting. Unfortunately, you can't recast your mortgage if you have a government-backed loan insured by the FHA, VA, or USDA. In addition, borrowers with non-qualified and jumbo mortgages may be able to recast their loans as well. What Types of Mortgages Can Be Recast?īoth Fannie Mae and Freddie Mac allow lenders and servicers to recast conventional loans. In this scenario, you could save $131,000 over the life of your loan through an extra principal payment compared to a mortgage recast, although your monthly obligations would remain unchanged. Plus, drastically reducing your loan term reduces your total interest costs far more than re-amortizing at a lower balance. ![]() If you decide not to recast your mortgage, or if your lender doesn’t offer recasting, here’s how making an extra $150,000 payment would affect your loan length and interest cost.īy not recasting and continuing to pay your current monthly minimum, you could cut your total loan length in half and have your home paid off in fewer than 15 years. This includes the $64,667 in interest you’ve paid so far and the $214,771 due across the remaining re-amortized term. Here’s how it would change your current payment and interest cost by using the $150,000 to reduce your loan balance to $233,000 and re-amortizing your payments for the remaining 27 years of your mortgage.īy recasting, you could reduce your monthly payments by nearly $900 and total interest cost by more than $138,000. Here's your existing loan if you chose to use the inheritance for other purposes and kept your mortgage as-is. You recently inherited $150,000 and are considering putting it towards your mortgage, either by recasting or making an extra payment. Making a principal reduction saves you thousands in interest, but doesn’t help your monthly budget.įor Example: You have a $383,000 loan at 5.5%. In general, recasting reduces monthly expenses but increases lifetime loan costs. Recasting Cost Far Less Than Refinancing: Recasting fees are low and will save thousands of dollars compared to refinancing, even with small balance loansĭoes a Mortgage Recast Save You Money? Yes and Noīoth recasting and making an extra payment are great strategies to reduce your mortgage burden, but they do so in different ways. You’ll Pay Less Lifetime Interest: Paying down your principal reduces the interest you'll pay across the remainder of your loan. If you currently have a favorable interest rate, you can keep it. You Can Keep Your Interest Rate: Recasting only affects your monthly payments. No New Appraisal: You won’t need a new appraisal to recast your mortgage, which saves time and avoids low valuations. No Credit Check or Financial Underwriting: Since you’re not taking out a new loan, your lender will not need to run a new credit check or reevaluate your finances. Reduced Monthly Payments: With the exception of homeowners with certain adjustable-rate loans, recasting will result in lower monthly payments for the remainder of your mortgage. Some of the benefits you can expect from recasting your mortgage include: ![]()
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