#RECAST MORTGAGE CALCULATOR SERIES#

Refinancing is often used when mortgage interest rates drop significantly. Because your new loan is smaller, your payments should also decrease. After you apply for a new loan, this replaces your existing mortgage loan. That means that the interest rate is unchanged.Д¬onversely, refinancing your mortgage involves taking out a new loan. However, this recast is done within the existing loan. By recasting your mortgage, you pay less interest over the life of the loan.ДЄdditionally, your recalculated payments are smaller. In a recast, you pay extra toward your mortgage principal, dropping the monthly payment amounts of your mortgage for the remainder of your loan. How is Mortgage Recasting Different From Refinancing? Another debt freedom strategy is to set money aside into a savings account, let your savings grow, and then make a lump sum payment. Many times, people slash their budgets or start side hustles and then decide to pay a little bit extra on their mortgage every month or as often as they can. You can use this windfall money to make that lump sum paying toward your mortgage. Maybe you land a very generous bonus at work or perhaps an inheritance comes your way. By taking some or all of the proceeds from your sale and applying it to your new mortgage, you can slash what you owe each month. If you move into a new home before your original house sells, you might do a recast after the sale. Recasting your mortgage is a real estate strategy just about anyone could use, especially if one of these situations apply to you. Whatever you decide, make sure it aligns with your financial plans and your values. Or maybe youвЂ™re going to take a staycation to celebrate. Perhaps you're ready to get started with investing. Maybe it means replenishing an emergency fund or growing a sinking fund. Now that youвЂ™ve done a recast, you can start to plan for the extra money that you freed up. You havenвЂ™t come this far only to get hit with a penalty! Step 5 вЂ“ Put your money to work Note that it is important to keep paying your regular mortgage payment amounts until you know for certain that the reamortization takes effect. ThatвЂ™s a fancy way of saying that you will get a new payment schedule reflecting the amount of money you need to pay each month. Step 4 вЂ“ Move to your new repayment scheduleДЄfter your recast is complete, your loan will be reamortized. Depending on your lender, you can expect to pay anywhere from $100 to $500 for a recast. While itвЂ™s not impossible for recasts to be done for free, itвЂ™s highly unlikely. That then means that you can expect smaller monthly payments for the life of the loan. Keep in mind that the more you pay, the lower your principal balance drops. Some lenders have a specific dollar amount that you have to pay as a minimum requirement. Step 2 вЂ“ Make a lump paymentДЄfter you start the recast process, your lender will typically ask you to make a lump-sum payment. In other cases, you will need to contact your lender by chat or phone to learn about their specific process. That means you might be able to click through the mortgage dashboard to find the information. Some banks and lenders advertise the service, but many do not. More likely, though, you will initiate the process. In some instances, if youвЂ™ve already been making extra payments to shave down the balance of your loan, your lender might reach out to you about doing a recast.

#RECAST MORTGAGE CALCULATOR SERIES#

If you qualify, you can actually recast your mortgage in a series of simple steps by working with your current lender. To learn more about how a recast would work in your situation, you can use a recast calculator online and crunch your exact numbers.

That drops your payments to $1,897 per month, which means youвЂ™re paying over $200 less per month for the entire life of the loan.

Now, you recast by putting a lump sum of $50,000 toward the principal. You originally have a $500,000 mortgage that charges 3% interest for 30 years. To illustrate how this works, letвЂ™s use some very simplified math. The reamortizationвЂ“or new repayment scheduleвЂ“should lower your monthly payments. After that, your mortgage lender reruns your mortgage numbers in what is called a reamortization. Sounds pretty good, right? To recast your mortgage, you will make a large payment on the principalвЂ“or the amount you owe excluding interestвЂ“of the loan. In fact, a mortgage recast can reduce what you pay in interest and slash your monthly payment amounts. So how do you do it? ThereвЂ™s no one method to paying down your mortgage debt, but a mortgage recast can certainly help. After all, thatвЂ™s an incredible step toward living a debt-free life and it can help make you a young millionaire. One of the most popular topics on the Marriage Kids and Money podcast is paying off your mortgage debt early.

Recast mortgage calculator