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Welcome to your constantly updated resource for news and views on the Brookline Real Estate market. Here you will find commentary and statistics to explain the daily changes in the Brookline specific housing market.

Whether you're looking for an estate in Cottage Farm, a condo in Brookline Village or are just stopping by please feel free to read along and comment at will. If you are interested in speaking about renting an apartment, buyer representation or listing your home please feel free to contact me.

Monday, February 11, 2008

If you cannot refinance, why not recast?

With the wildly fluctuating mortgage market of late we've seen a boom in refinance applications. Rates change rapidly and the cost/benefit difference doesn't quite pay enough to jump fully into a refinance in a lot of cases for people who have bought in the last three years. One option that banks don't advertise a lot (because it actually costs them money in the long run) is the mortgage recast. In essence, if you have extra money (bonus or tax refund/rebate) and you are wary of the stock market, why not arrange to "pay down" your mortgage a little bit and then adjust your monthly payment off of the new mortgage amount.

For example:

$300,000 owed on a house - a 6% rate would have you paying roughly $1,800 a month. $1,500 of that would be interest to the bank.

Put $25,000 into a recast and the bank will adjust your principle and interest payment to $1650 a month.

You would turn your $25,000 in to a 30 year savings of $54,000. If you do this a few times over the life of the loan, or if you have a larger chunk to put down you can very quickly reduce your monthly payments.

1 comments:

North Georgia Mountains Real Estate said...

What a great idea and I have never heard of this before. So if you come into some money this is a great alternative to bringing down your monthly payment and cost of home.

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Disclaimer

The views expressed on these pages are the opinion of the author and any public contributors. They do not substitute for the advice of a legal or financial professional. These opinions are not representative of any firm or business. Please always consult an attorney, financial professional or sign a contract with a Buyer Agent or Seller's Agent for specific advice.