A mortgage recast is when a lender recalculates the monthly payments on your current loan based on the outstanding balance and remaining term.
Mortgage recasting may be a good idea if you: Have cash on-hand. If you have money saved up or receive a cash gift or inheritance, recasting your mortgage is an excellent way to invest in your home equity while keeping more of your income each month. Want lower monthly payments.
Is a recast mortgage a good idea? The biggest takeaway when considering a recast mortgage is that it will not lower your mortgage rate or shorten the remaining loan term. If you are looking to pay off your mortgage faster, you can still make bigger payments to pay down the principal after the recast.
Lenders usually require $5,000 or more to recast a mortgage. The remaining balance is then amortized reduce the monthly payments. Typically, you have to pay a fee to recast your mortgage. The fee varies by lender, but usually doesn't exceed a few hundred dollars.
Definition of recast
transitive verb. : to cast again recast a gun recast a play also : remodel, refashion recasts his political image to fit the times.
A mortgage recast is when a lender recalculates the monthly payments on your current loan based on the outstanding balance and remaining term. When you purchase a home, your lender calculates your mortgage payments based on the principal balance and the loan term. Every time you make a payment, your balance goes down.
A mortgage recast is a helpful tool to get a lower monthly payment. It doesn't require you to apply for a new loan and the service fee is relatively low. It's a straightforward way to put extra cash toward your principal and enjoy an immediate lower payment for the rest of your loan.
Recasting changes your loan balance after you have paid a large amount, creating a lower monthly payment. Refinancing is applying for a new loan to replace your old mortgage, often with better terms, such as lower interest.
A recast mortgage is a process of reevaluating monthly mortgage payments by taking the loan's balance and dividing it by the remaining months left on the mortgage term. In doing so, homeowners ahead of schedule may be eligible to reduce their monthly payments.
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 (typically around $250) associated with the recast. There is not typically a limit on how many times someone can recast their loan.
The biggest drawback of recasting a mortgage is that it doesn't shorten the term of the loan. Depending on how much you're required to pay down the balance, recasting your mortgage also reduces your overall liquidity (i.e., cash on hand) because contributed funds will be tied up in the equity of the home.
Regardless of the amount of funds applied towards the principal, paying extra installments towards your loan makes an enormous difference in the amount of interest paid over the life of the loan. Additionally, the term of the mortgage can be drastically reduced by making extra payments or a lump sum.
Refinancing allows you to replace your current loan with a new one and hopefully lower your car payment in the process. You may qualify for a lower interest rate — especially with a record of on-time payments — and be able to extend your loan term or both, enabling you to reduce your monthly payment.
Some lenders require a minimum of $5,000 for a recast, and you get a lower monthly payment with only about $250 in closing costs. This payment on the principal may be enough to get you below the 80 percent loan-to-value ratio and allow you to drop the PMI.
recasting, redrafting, reworking, reformulation, overhaul, rewriting, rewording, revision, Remelt, revamping, rethinking, reallocation, reconfiguration, redefinition, transformation, consolidation, redesign, reorganization, rescheduling, realignment, renovation.
Your required monthly mortgage payments will not be lowered when you make a lump sum payment on your mortgage or recast a loan, and you will still be required to pay the same amount to your lender going forward. However, your interest charges for each month will be adjusted.
to give (someone or something) a new role, function, or character. recast themselves as moderate and kind. 2. ( often foll by as) to cast (an actor or actress) again or in a different part.
Wells Fargo, Bank of America, JPMorgan Chase and Quicken Loans offer mortgage recasts on some, though not all, of their loans. Recasts aren't well known for a few reasons. Record-low interest rates in recent years made refinancing the go-to approach for borrowers looking to save on monthly payments.
Since your interest is calculated on your remaining loan balance, making additional principal payments every month will significantly reduce your interest payments over the life of the loan. By paying more principal each month, you incrementally lower the principal balance and interest charged on it.
Mortgage recasting is a fairly simple process that doesn't require a credit check, home appraisal or closing costs.
Higher down payment: Making a higher down payment when obtaining a home loan can reduce the principal amount. A lower principal amount means lower interest and EMI payments.
Paying additional principal on your mortgage can save you thousands of dollars in interest and help you build equity faster. There are several ways to prepay a mortgage: Make an extra mortgage payment every year. Add extra dollars to every payment.
A mortgage recast is a way to lower your monthly mortgage payment. It involves paying a one-time lump sum toward your loan's principal amount. In turn, your lender alters your amortization schedule. This resets your monthly payments without changing your original loan terms or interest rate.
By paying half of your monthly payment every two weeks, each year your auto loan company will receive the equivalent of 13 monthly payments instead of 12. This simple technique can shave time off your auto loan and could save you hundreds or even thousands of dollars in interest.