If you have the ability, a principal reduction recast can help you save.
Have you ever heard of a principal reduction recast? Today, I’m here with some important information on this topic, as it is something you need to hear about. It may sound complex and confusing at first, but it’s nothing to worry about.
In short, a mortgage recast is when someone makes a lump sum payment on their current mortgage which allows them to change their monthly payment by reducing the principal that they owe.
This can work very well in certain scenarios.
If you own a home with a 3% interest rate, for example, and have enough money saved up, you can lower your monthly payment. Start by contacting your lender, as many let people do this for a small fee.
This mortgage recast will re-amortize your loan with the new principal amount.
This is great for people who don’t want to move and came into some extra cash somehow.
This also works well for people who want to buy another house before selling their current one. Maybe you have some money saved up but can’t afford a second mortgage payment. Many people will take the equity from their old home and put that toward getting a new one. Then they’ll refinance and pay those fees, which can be expensive. Therefore, a principal reduction recast may be the way to go.
It may take some time, but then your payment will be lower and you can afford more of a down payment for the next home.
If saving money this way is something that interests you, I would recommend that you contact your lender. They are the experts that can tell you about your specific situation. If you have any other questions about this or real estate in general, please feel free to reach out to me by phone call or email. I would be happy to serve as your real estate resource.