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.
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Monday, February 11, 2008
If you cannot refinance, why not recast?
Posted by
The Brookline Connection
at
11:03 AM
Labels: 02446, Home Loans, Mortgages
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- The Brookline Connection
- Greg Kiely has found a special home in Brookline, and he enjoys nothing more than helping others discover the numerous advantages offered by the community. Drawing on his in-depth knowledge of the area, Greg is fully committed to making your buying or selling experience a complete success. Greg is a REALTOR at William Raveis Real Estate in Brookline and is the former listing agent for The Warwick at Coolidge Corner as well as many other properties in and around Brookline. Greg lives on Winchester Street in Coolidge Corner with his English Cream Golden Retriever Tessie.
1 comments:
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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