Asked by: Brant Pelchenpersonal finance personal loans
What does it mean to recast a mortgage loan?
Last Updated: 17th April, 2020
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In this manner, is it good to recast mortgage?
For the borrower, the primary benefit of recasting a mortgage is to reduce monthly payments. Recasting also reduces the amount of interest the borrower will pay over the life of the loan. It can also be a more comfortable option than refinancing.
Also, is it better to recast or pay down principal? Recasting is sometimes referred to as re-amortization. Instead of paying extra on your mortgage each month, you make one larger lump sum payment against the principal balance and ask your lender to reset the monthly payments. You'd pay less in interest overall but you wouldn't pay off your loan any earlier.
Also to know is, what happens when you recast a mortgage?
A mortgage recasting, or loan recast, is when a borrower makes a large, lump-sum payment toward the principal balance of their mortgage and the lender, in turn, reamortizes the loan. Less interest paid over the life of the loan. If you have a low interest rate, that will stay the same.
How many times can you recast a mortgage?
You must make at least two consecutive monthly payments at your current payment amount before a loan can be recast. There may be a small fee associated with the recast. This is typically around $250. There is not typically a limit around how many times someone can recast their loan.