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Is it a good idea to recast my mortgage?
Recasting your mortgage is a great way to increase your home equity while retaining more of your monthly income if you have money saved up, receive a cash gift, or inherit money. Want lower monthly payments. You can lower your monthly payments and loan principal by recasting your mortgage.
What are the disadvantages of recasting a mortgage?
Recasting your mortgage has drawbacks because it doesn’t shorten the term of your loan. Your interest rate remains the same, which is undesirable if your interest rate is higher. More of your cash is tied up in equity. A fee is imposed by the lender, usually not exceeding a few hundred dollars.
What is the purpose of recasting?
Making a lump-sum payment toward the loan’s principal balance is known as a mortgage recast. After that, your lender will remortgage your loan using the new (lower) balance. The idea is that since your principal decreased but your interest rate and term remained the same, you could reduce your monthly payments.
What is the difference between recast and refinance?
After making a sizable payment, recasting reduces your loan balance to result in a lower monthly payment. Applying for a new loan to replace your current mortgage with better terms, such as lower interest, is known as refinancing.