![]() ![]() If the borrower doesn't have a large amount saved up, it may not be worth the effort after the upfront costs. Minimum payment - many lenders require a minimum lump sum payment for recasting.The mortgage term remains the same - the borrower will not be able to pay off his mortgage any time earlier.If the interest rate is declining, refinancing may save the borrower more money than recasting. The interest rate doesn't change - the interest rate remains the same for the mortgage.While there are many good reasons for recasting, there are also downsides. Borrowers pay only a few hundred for recast. Low upfront costs - the upfront costs are cheap compared to refinancing.No credit or income check - since recasting does not initiate a new loan as refinancing does, there is no credit or income check.Lower monthly payments - after the mortgage is re-amortized, the monthly payments will be lower from now on.Save money on interest - depending on the size of the lump sum payment and the mortgage size, the borrower could save thousands and thousands of dollars on interest payments throughout the loan.Following are the mortgage recast pros and cons. There are advantages and disadvantages of recasting a mortgage depending on the borrower's situation. The fees should be well worth it if the lump sum is large because a reduced balance could save a borrower thousands in interest payments. Borrowers should talk to their lender and ask for the exact amount they have to pay for recasting. There are also processing fees to recast a mortgage which could cost a few hundred dollars. Lenders usually have a minimum requirement for this payment, it can be anywhere from $5,000 to $10,000. To recast a mortgage, borrowers need to make a one-time lump sum payment. Since interest payment is recalculated every month based on the remaining balance, the lower monthly payment means the borrower would save a lot of money on interest payments throughout the loan. The interest rate and the terms remain the same for the mortgage, but the monthly payments are reduced due to mortgage recasting. A mortgage recast is when a borrower makes a large payment to reduce the principal of the mortgage, and the lender re-amortizes the loan based on the new balance.
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