Mortgage Recasting....

Anybody heard of this? Apparently, some mortgage companies allow homeowners to "recast" their mortgage instead of refinancing. Since I want to paydown some principle and get the reduced payment benefit, I'm thinking about doing this. Any suggestions?

 

Generally that's a product is specified at the closing. If they will allow you to recast...you probably had to take a higher rate for that feature.

Recasting is USUALLY done for people with Pay Option Arms. These are the products that allow you to pay UNDER the amount of interest accrued. Once you get within' 10% (some may go to 5%) of the home's value, the loan is recast at the new amount...

 

According to the mortgage guy, it'll only cost $250 to recast. Since the rate I have now is only 25 bps aove what a new rate will be for a new 30 year fixed, I'm thinking it's better to just recast. We got decent rate last time as we put 20% down and both have excellent credit. By recasting I'll keep the same rate and the term won't change. I'm putting an extra 50-60K down in principle. Trying to get it so the wife doesn't have to work and this is the first step.

 

Sounds good. Who's the mortgage with?

 

Went through a broker friend that went through SunTrust.

 

Interesting...I've used SunTrust a few times...I'll have to check to see if this is the norm.

 

According to the ST guy all one has to do is pay down at least $5,000 and pay the $250 fee. It beats the hell out of playing the interest rate game if rates haven't changed all that much from when you first finance the house. Cool thing is I plan to do the same thing again in the next couple of years if the money is there.

 

Recasting is not a special feature per loan, in my experience, the majority of mortgage companies offer this on their fixed rate mortgages, and if it's only $250, that sounds pretty cheap, I remember hearing $500 - $1000.

 

Hell, even at $1000 it's way cheaper than refinancing at most places.

 

Depends, to re-cast you must have at least $5,000 + $250 re-casting fee; you keep the same rate, just lowers the principal balance the loan amortizes from, thus reducing your payment. A regular refinance you have the oppurtunity to lower your rate, and thus your payment, but you must pay closing costs, NC @ $2200 - VA @ $4500, not including escrows. So depends what state you're in, and your current rate; in your situation, sounds like re-casting is the way to go.