Consider A Recast Rather Than Refinance

Want to apply a large amount of money towards the principal of your loan yet do not want to reset the loan for another 30 years? The answer may be recasting.

What is a recast?

A recast is not a mortgage refinance. When you recast your loan, you apply a large amount (usually > $10K) to your principal. The servicer will re-amortize your loan at the new principal balance but on the same schedule.

Is there a cost?

The cost to recast a mortgage is typical $250 to $500. Also, keep in mind, not all loans allow for a recast to be done, but conventional loans do.

How do you do a recast?

If you want to do a recast rather than a mortgage refinance, call your loan servicer. Tell them you want to do a “recast” not a refinance. You may have to be a bit persistent with the customer service people as this request isn’t very frequent. Do not let them talk you into refinancing– you don’t need to do that. Note: Most mortgage servicers allow you to recast only a few times during the life of the loan. Before you do this, it’s best to consult with a mortgage professional to see if a mortgage refinances is a better option.

What is the alternative?

The other way to achieve your cash flow or loan interest payments is to refinance. Of course, you bring the necessary cash to closing like above, and what I recommend is this: go with a lower term. So, if you currently have a 30-year loan, let’s do a 20-year loan or a 15-year loan at the new balance. You may be saving more money than if you recast.

Need more answers?

If you are interested in exploring your options, I can lay both options out for you to evaluate. In an easy-to-understand way, I will outline the numbers for a recast vs refinance. The correct answer will be right in front of you and you will feel good knowing you took the time to make the best financial decision for your home finance goals. Ready to apply? Click here. Interested in learning more with no obligation? Please feel free to submit a quick email to me and I will get back to you as soon as possible.