Save Money on your Mortgage WITHOUT REFINANCING

Everybody. It’s Janine Sasso, your local Chicagoland realtor. And in today’s episode, we are talking about mortgage recasting. That’s right. Mortgage recasting, huh? Was my first thought, too, because I am by no means a mortgage lender, but because I sell houses, because I need to know a certain amount in the mortgage world that was funded by my interest and I’m pretty sure it was part years too. Stay tuned. Mortgage recasting is really an interesting tool that homeowners can use if they are looking to reduce their monthly mortgage payment without a refinance. The way it works is that you pay the lender a lump sum of money that is put towards your principal, and the mortgage lender is distributing your principal over the term of the remaining years you have, therefore lowering your payment and lowering the interest you will pay over the life of the loan. What it does not do, however, is affect your interest rate or the term of your loan. So this all remains the same. Having some great benefits.

The first great benefits. It lowers your monthly payment. The second one, it will lower the amount of interest you pay over the life of the loan. And the third benefit it will not touch your interest rate if you already have a low interest rate. Now vice versa. It will also not touch the high interest rate. If you have a higher one, if you do have a high interest rate, you want to go into a lower interest rate. You will need to look at refinancing. The way it works is that the lender requires you to make a lump sum payment towards your principal. Oftentimes, this is required to be $5,000 or more. Fees are varying by lenders, but oftentimes they are not exceeding more than a few hundred dollars. Of course, you need to consider that the money you are using to recast will not be available to you to reinvest in others or pay off other things. Now, here are some qualifications that you should be aware of. First off, not all lenders offer recasting. So you need to check and make sure that the lender you are choosing does actually offer that.

Most of the big banks, Wells Fargo, Bank of America, they will offer that. Currently, also, not all of them types will qualify for recasting. If you have an FHA or a VA loan, chances are a request will not be possible. Now, recasting versus refinancing. Like I mentioned before, those are very different things. The recast will allow you to lower your monthly payment without really touching the terms of your loan. While the refinance will generate a brand new loan to you, which carries a lot higher cost than the recast. However, if your interest rate is high, you’re looking to get a smaller one or lower interest rate. Maybe a refinance might make sense. This is definitely something you want to take to your local mortgage professional. So I hope this was helpful for you and your situation. Maybe you are interested in doing a recast. Maybe you’re looking into more of a refinance-type situation. Either way, I hope this information is now available at your fingertips. And if you have any other questions, I’m always happy to answer them and you can send them directly to my email.

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