{"id":864,"date":"2018-11-08T03:21:14","date_gmt":"2018-11-08T03:21:14","guid":{"rendered":"http:\/\/www.mikeclover.com\/blog\/?p=864"},"modified":"2018-11-08T03:21:14","modified_gmt":"2018-11-08T03:21:14","slug":"should-you-consider-recasting-rather-than-refinancing-your-mortgage","status":"publish","type":"post","link":"https:\/\/www.mikeclover.com\/blog\/2018\/11\/08\/should-you-consider-recasting-rather-than-refinancing-your-mortgage\/","title":{"rendered":"Should you consider recasting rather than refinancing your mortgage?"},"content":{"rendered":"<p><a href=\"http:\/\/www.mikeclover.com\/blog\/wp-content\/uploads\/2018\/11\/iStock-869595964.jpg\"><img decoding=\"async\" loading=\"lazy\" class=\" wp-image-865\" src=\"http:\/\/www.mikeclover.com\/blog\/wp-content\/uploads\/2018\/11\/iStock-869595964-300x200.jpg\" alt=\"Shot of a mature couple using a digital tablet while going through paperwork at home\" width=\"581\" height=\"387\" srcset=\"https:\/\/www.mikeclover.com\/blog\/wp-content\/uploads\/2018\/11\/iStock-869595964-300x200.jpg 300w, https:\/\/www.mikeclover.com\/blog\/wp-content\/uploads\/2018\/11\/iStock-869595964-768x512.jpg 768w, https:\/\/www.mikeclover.com\/blog\/wp-content\/uploads\/2018\/11\/iStock-869595964-1024x683.jpg 1024w\" sizes=\"(max-width: 581px) 100vw, 581px\" \/><\/a><\/p>\n<p><strong>\u00a0<\/strong><\/p>\n<p>Have you come into a nice sum of money that you plan on using to reduce the balance on your home mortgage? If so, you have three choices.<\/p>\n<ul>\n<li>You can make a lump sum payment on your current mortgage<\/li>\n<li>You can refinance into a new mortgage<\/li>\n<li>You can recast your current mortgage<\/li>\n<\/ul>\n<p><strong>What\u2019s the difference between these options? <\/strong><\/p>\n<p><strong>Making a lump sum payment <\/strong>is simplest. You don\u2019t have to do a thing except increase the amount of the check when you make your next payment.<\/p>\n<p>The result will be that you\u2019ll pay less in interest because your monthly balance will be less. Since your payments will remain the same and you now owe less, you\u2019ll also take time off the end of your mortgage.<\/p>\n<p><strong>Refinancing your mortgage<\/strong> entails going back to your lender and getting an entirely new loan.<\/p>\n<p>With this option you can reduce the number of years remaining on your loan \u2013 or you can increase them. If you have 25 years remaining on a 30-year loan, you might choose to refinance for a new 30-year period. Between that and the lower loan balance, your payments will be significantly reduced.<\/p>\n<p><strong>Recasting your mortgage<\/strong> is a simple process. You simply pay a small fee to the bank, make your lump sum payment, and the bank will re-calculate your payments based on the lower loan balance. For instance, lets assume that you\u2019re making payments on a $200,000 loan at 4.5% interest. Your principal and interest payments on a 30-year loan will be $1,013. If you recast that mortgage and reduce the loan balance by $20,000, your new payment will be $912.03.<\/p>\n<p>Here at Homewood Mortgage, the recast fee is $150 and the minimum lump sum payment is $12,000. Borrowers may only exercise this option once during the life of the loan.<\/p>\n<p><strong>Which option is best for you?<\/strong><\/p>\n<p><strong>Making a lump sum payment<\/strong> is something you can do at any time. You might choose to increase your payments each year when you get a tax refund or an annual bonus. Many homeowners choose to simply add a few dollars each month to bring the balance down faster.<\/p>\n<p>This option has no effect on your monthly payment, but it reduces the term of your mortgage, and thus the number of dollars you\u2019ll pay in interest over time.<\/p>\n<p><strong>Refinancing your mortgage <\/strong>is the most expensive option and takes the most time. You\u2019ll need a new appraisal and you\u2019ll pay the standard loan fees. You\u2019ll also be required to re-qualify based on your current income, obligations, and credit scores. However, it can be beneficial if you can refinance at a significantly lower interest rate.<\/p>\n<p>To decide if this is a good option, compare the cost of the new loan, which could be upwards of $4,500, to the amount you\u2019ll save each month. Generally, this is only a good idea if you plan to stay in the house for at least 5 more years.<\/p>\n<p><strong>Recasting a mortgage<\/strong> is easier, since you don\u2019t have to qualify, no appraisal is required, and the fee is low.<\/p>\n<p>However, there are drawbacks. First, recasting is\u00a0 possible only with a conventional loan. FHA and VA loans are not eligible. Next, not all banks offer recasting, and you must have a large lump sum with which to reduce the principal balance.<\/p>\n<p>Recasting might be a good idea if current interest rates are higher than the rate you\u2019re paying, because nothing about your mortgage loan changes except the balance and the monthly payment. You\u2019ll keep the same loan term and interest rate.<\/p>\n<p>To decide if it\u2019s right for you, weigh the benefits of having a lower monthly mortgage payment against having a large sum of liquid cash at your disposal.<\/p>\n<p>If you\u2019re interested in refinancing or recasting your current mortgage loan, give us a call at <strong>Homewood Mortgage, the Mike Clover Group.<\/strong> We\u2019ll be glad to show you what each option will cost, show you the new payment amount with each option, and help you compare the numbers to decide which Is best for you.<\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"http:\/\/www.mikeclover.com\/blog\/wp-content\/uploads\/2016\/10\/Mike-Clover-Group-Email-Signature-muy-grande.jpg\"><img decoding=\"async\" loading=\"lazy\" class=\"alignnone size-medium wp-image-530\" src=\"http:\/\/www.mikeclover.com\/blog\/wp-content\/uploads\/2016\/10\/Mike-Clover-Group-Email-Signature-muy-grande-300x183.jpg\" alt=\"mike-clover-group-email-signature-muy-grande\" width=\"300\" height=\"183\" srcset=\"https:\/\/www.mikeclover.com\/blog\/wp-content\/uploads\/2016\/10\/Mike-Clover-Group-Email-Signature-muy-grande-300x183.jpg 300w, https:\/\/www.mikeclover.com\/blog\/wp-content\/uploads\/2016\/10\/Mike-Clover-Group-Email-Signature-muy-grande.jpg 405w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u00a0 Have you come into a nice sum of money that you plan on using to reduce the balance on your home mortgage? If so, you have three choices. You can make a lump sum payment on your current mortgage &hellip; <a href=\"https:\/\/www.mikeclover.com\/blog\/2018\/11\/08\/should-you-consider-recasting-rather-than-refinancing-your-mortgage\/\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.mikeclover.com\/blog\/wp-json\/wp\/v2\/posts\/864"}],"collection":[{"href":"https:\/\/www.mikeclover.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.mikeclover.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.mikeclover.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.mikeclover.com\/blog\/wp-json\/wp\/v2\/comments?post=864"}],"version-history":[{"count":1,"href":"https:\/\/www.mikeclover.com\/blog\/wp-json\/wp\/v2\/posts\/864\/revisions"}],"predecessor-version":[{"id":866,"href":"https:\/\/www.mikeclover.com\/blog\/wp-json\/wp\/v2\/posts\/864\/revisions\/866"}],"wp:attachment":[{"href":"https:\/\/www.mikeclover.com\/blog\/wp-json\/wp\/v2\/media?parent=864"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.mikeclover.com\/blog\/wp-json\/wp\/v2\/categories?post=864"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.mikeclover.com\/blog\/wp-json\/wp\/v2\/tags?post=864"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}