![]() ![]() ![]() To be eligible for recasting, you must make your mortgage payments on time and have a solid payment history. Only once you are ready with $20,000, pay it against your principal amount. Lenders may set a recast limit, say $20,000. So, you need to speak to your lender before deciding on the recasting process. Minimum Principal ReductionĮvery lender has minimum outstanding criteria for recasting. Loans like the United States Department of Agriculture (USDA) or the Department of Veterans Affairs (VA) cannot be recast. Not all mortgages are eligible for recasting. There are certain requirements you must fulfill, in order to qualify for mortgage recasting. The service fee varies from lender to lender. Step 3: The lender charges servicing fees: Lenders will charge a flat service fee for the recasting process. After payment, the lender will modify the repayment plan to reflect your new monthly commitments. Step 2: The lender reamortizes your balance: Mortgage amortization refers to the process of paying off a mortgage loan through a series of regular payments over a fixed period of time. This amount is deposited in your loan account against the principal loan value. Step 1: The homeowner makes a payment: As the homeowner, you first pay the lender’s pre-decided minimum amount. Although there might be some additional tasks that may differ from lender to lender. Listed below are steps for recasting a mortgage. Say, you got a huge bonus at work, use some of it to recast your mortgage! How Does Recasting A Mortgage Work? Once the mortgage is recast your monthly payment will come down to $840!Ĭonsider a mortgage recast if you have unexpected cash in your hands. If you decide to pay a lump sum of $40,000, your new loan amount to $160,000. Your monthly mortgage payment will be around $1,072.43. Say, you have a 30-year mortgage tenure for $200,000 and a 4.99% interest rate. However, some government loans like the Federal Housing Administration (FHA) or Department of Veterans Affairs (VA) do not allow recasting mortgages. It is a good option if you do not have a cash flow issue. What does Recast Mortgage mean?Ī Recast mortgage is a strategy where the loan borrower pays a lumpsum amount towards their mortgage principal. Keep in mind, recasting the mortgage will not lower the interest rate or repayment term. The mortgage lender will recalculate the mortgage amount and lower your monthly payment. If you have extra cash in hand, put it towards your principal amount. High mortgage payments can derail your monthly budget making it impossible to enjoy the little joys of life. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |