Here’s how ‘recasting’ could help you lower your monthly mortgage payments

Here, you'll see some of the counterarguments to those points favoring an early payoff.. They also reduce the amount of interest you'll owe going forward. That can create a snowball effect that will help you pay down your. have to see a huge chunk of their monthly cash flow go to a mortgage company.

A mortgage recast is a way to possibly lower your monthly payments without getting a new loan. It can be an easy cash flow fix, and you can often save money over the remaining life of your mortgage loan. As with any type of borrowing, however, there are pros and cons.

Higher Mortgage Payments: It is possible for a mortgage recast to actually increase your monthly payments. This can occur in situations when homeowners make low monthly mortgage payments and are required by lenders to recast the mortgage. While uncommon, these situations can and do occur. Fees: There are fees involved in recasting a mortgage. These will vary depending on your lender, but.

What exactly is a recast? With a recast, a homeowner keeps their original loan terms (interest rate and maturity date) but makes one or more extra payments to principal to reduce the outstanding loan balance. The lender then recalculates the monthly payment based on the lesser principal owed.

 · Shortening your mortgage term. For example, with most 30 year fixed rate mortgages, you pay a huge amount of interest for the first seven years or so of your mortgage. As you get closer to the end of the life of the mortgage, more of your payments go towards principal.

In this case, you could benefit from recasting your mortgage to a lower monthly payment. Mortgage Recast Example. Original loan amount: 0,000 Mortgage interest rate: 4% Original monthly payment: $1,193.54 Current balance: $175,000. Let’s assume you started out with a $250,000 loan amount on a 30-year fixed mortgage set at 4%.

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You can rely on the professional help and experience of guardian mortgage lenders. Here are some clear, plain answers to some of our most frequently asked questions. Sometimes it is advantageous to pay points and get a lower interest rate if you plan. PMI is included in the escrow portion of the monthly payment.