AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |
Back to Blog
Recast mortgage payment calculator4/5/2024 You can’t recast government-backed mortgages, like FHA loans, U.S. How Do I Qualify for a Mortgage Recast?īesides coming up with the minimum $5,000 lump sum you’ll need to recast (some lenders may require a larger payment), you’ll need to meet certain requirements: A conventional mortgage Subtract your $30,000 payment and that’s $11,310 saved. That would add up to $41,310 over the remaining 15 years of your loan’s term. That’s a monthly savings of $229.50.Īnd we keep the saving game going, everybody. You pay $250 for the recasting fee, and after the $30,000 is applied to the mortgage balance, your new monthly mortgage payment on your remaining 180 payments will be $1,290.56. So, you ask your lender to recast your mortgage and apply the money to the mortgage principal. If you didn’t recast, you’d end up paying $74,908.14 in interest on the remaining 180 months of loan payments.īut, plot twist! You’ve come into an unexpected, large sum of money – let’s say it’s $30,000 – and you decide to put your windfall toward your mortgage. Let’s say you got a $300,000 mortgage loan with a 30-year term at a 4.5% interest rate.įor 15 years (180 months), you’ve been making a monthly mortgage payment of $1,520.06 (principal plus interest), and your remaining mortgage balance is $198,701.92. And bonus, we’ve got a real-life example right here: Look for an online calculator to help you figure out what a mortgage recast might do for you. Recasting fees aren’t the only payments you’ll need to take into consideration – don’t forget about that large lump-sum payment.īecause of the large payment, recasting is generally more expensive upfront – but you’ll save money in the long run. What you pay to recast will mostly be based on the size of your loan and the home’s condition, but recasting fees are typically a few hundred dollars. On average, the total cost to refinance is $5,000. Recasting and refinancing both come with fees, but the fee to recast is generally lower than what it costs to refinance. Once you’ve built up 20% equity in your home and can eliminate mortgage insurance, you may decide you want to switch to a conventional loan.Įmail Facebook LinkedIn Reddit Twitter A recast tends to cost less in fees Let’s say, for example, that you bought a home with a Federal Housing Administration (FHA) loan. You can lower the mortgage loan rate and even switch the type of mortgage you have. The length of the new loan can be shorter or longer than the original loan. On the other hand, a refinance is an opportunity to change the terms of your mortgage by getting a new mortgage with new terms. But here’s what does change: the remaining balance on your mortgage and your monthly mortgage payment. With a mortgage recast, your interest rate and term remain the sameīecause the mortgage loan hasn’t changed with the mortgage recast, the loan’s interest rate and the loan term stay the same. With a mortgage recast, there are a lot fewer steps involved – and you keep your existing mortgage. To get that new loan, there are steps you have to take, like filling out a new mortgage application, getting your credit score checked and maybe even paying for a home appraisal. When you refinance, you replace your original mortgage with a new loan that comes with different loan terms. With a mortgage recast, your existing mortgage remains your mortgage. Let’s get into the differences between a loan recast and a loan refinance. Your new loan balance is divided by the number of months left until the end of the loan’s term to get your new monthly mortgage amount. Next, your lender recalculates your loan using the loan’s original interest rate, the original loan term (aka loan length) and the new, smaller loan balance. That payment shrinks the principal balance on the mortgage loan by whatever amount you paid. So, how does recasting work?įirst, you make the extra payment. A lower monthly mortgage payment is a great benefit, but it isn’t the only one – we’ll get into more recasting benefits later. The result of that large payment will be reduced monthly mortgage payments, making your monthly housing costs more affordable. Most lenders require a minimum of $5,000 for a mortgage recast. Recasting a mortgage is when you make a large lump-sum payment toward a loan’s principal balance and the lender recalculates the loan based on the new balance.īy large lump-sum payment, we mean $5,000 or more. What Does It Mean To Recast Your Mortgage? Not sure what that is? We can explain what mortgage recasting is (it’s a lot different than refinancing) and when it might make dollars and cents sense for you to consider it. Have you ever thought about a mortgage recast? For homeowners with mortgage loans, refinancing (read: swapping out your original loan for a new loan with different terms) is a well-known way to lower monthly mortgage payments.īut refinancing isn’t the only option.
0 Comments
Read More
Leave a Reply. |