What's a Mortgage Recast?

What's a Mortgage Recast?

If you've recently come into a large sum of money,you may be considering paying off or paying down your outstanding loans, including your mortgage. When you pay down a substantial amount of your loan you may benefit from what many mortgage lenders call a loan recast. This is when your lender recalculates your monthly payments based on your outstanding balance and remaining term, lowering your monthly payments over the life of the loan. While a recast doesn't require a new appraisal, a fairly large lump sum is required. In addition, not all mortgages allow them.

Additional points to consider are:

Do you want a shorter loan term?

A recast doesn't allow this; instead, it lowers your monthly payments. If you want to pay off your mortgage ahead of schedule, you may be better off refinancing to a shorter loan term or making additional payments towards your loan's principal.

What about other debts?

If you have outstanding student loans or credit card debt, your cash flow may see a bigger improvement if you use your windfall to pay down or eliminate these. Paying down higher-interest debt may also increase your credit score.

As always, I'm available to answer all your home financing questions and would be happy to discuss options that may work best for you!2

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