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Old 06-03-2015, 09:31 AM
 
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From what my loan company told me and what I read on the internet about "recasting", it's generally allowed on Conventional Fixed Rate Loans, but not all loan companies advertise it. Also, if you want to recast, avg fee is around $250 but it does get your mortgage payments down because it's basically re-amortizing based on new balance. Great way to save money from having to refinance. Unless of course interest rates have dropped significantly where you can save more if you refinance.
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Old 06-03-2015, 10:41 AM
 
Location: New York
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Mortgage 101: the term "Recasting" is the point in the mortgage when agreed-upon loan terms change.

  • Most popular were the old 5yr MTA from Countrywide and the 10yr Option arms from World Savings and (Pick-a Pay loans) Wells Fargo. Recasting is used when the "Less than interest payment" changes, when interest only payment is required, a portion of the principle is to be included in the payment, when the payment changes to a full PITI payment.
  • Going deeper - the recasting point can be referred to the frequency of the interest rate changes. Based on the Libor (monthly index recasting), or the Treasury Index (yearly index recasting). Having an interest based on the Libor index - making less than the full interest rate payment, borrowers saw their loan balance grow very quickly when the interest rates went up. Contrary with the CW MTA option arms - interest rate changes were gradual because changes were averaged over the preceding 12 months prior.
  • The recast point can be used with interest only loan, the generally 10 year point when principle is to be included with the payment. The payment balloons into a 30 year loan to be paid off in 20 years.
  • It can also be used to point out with an ARM (2/28, 3/27, 5/25, 7/23), when the interest rate goes from fixed to adjustable.
  • Not to be confused with an Amortization Schedule which shows payments over time. A portion of each payment how much interest vs principle is paid.
If you make one lump sum payment to your existing loan. The payment will remain the same, all you are doing is shortening the term. To restructure (modify) the mortgage into a smaller loan, smaller payment, shorter term, better interest rate, with little to no closing costs. Have to distinctly ask lender for an in-house refinance.

My $00.02 looking at money management - mortgage interest is one of the things that is still a tax write off. Making more than the required payment, is one of the ways to dramatically increase your credit score. Good credit you pay less, low credit you pay more. Once your mortgage is paid off - over time, may need a co-signer for new financing.

Recommend putting a portion of your money towards the principle, doing an in house refinance as discussed above. Sending in extra with your regular payment, manipulating your credit score high so it cost less to live. Also putting a large sum into a municipality fund or bond. Where it grows tax free and is a conservative investment.

Good Luck



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Last edited by Modification Specialist; 06-03-2015 at 11:58 AM..
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