![]() To see your mortgage payment with our calculator, here's what you'll need to provide: Paying an additional $500 each month would reduce the loan length by 146 months.Lowering the interest rate by 1% would save you $51,562.03.Paying a 25% higher down payment would save you $8,916.08 on interest charges.That was a relief to us, but only you can decide whether you’d prefer to owe less each month or have more savings or investments. In the end, for what was in our case a $250 processing fee and an additional 13% of the home's selling price, we lowered our monthly payments by $1,400. I also like knowing that we'll never be on the hook for that gigantic monthly mortgage payment and that we'll pay less in interest overall. I want that feeling again when we eventually sell our New Jersey house. We loved getting to keep most of the money from the sale of our New York house because we had paid more than our monthly mortgage payment there. But our decision was partly psychological. Over time, those potentially could have netted us more money than we saved on our monthly mortgage payments because the interest rate on our mortgage is fairly low. Why we recast our mortgage There are many things we could have done with the proceeds of our home sale instead of lowering our monthly payments. It would've been less than 3 months had I searched my spam folder sooner for the documents to e-sign. It took about 4 months from the time we called to initiate the process to the time our monthly mortgage payment was lowered. We checked our mail We received a printed letter confirming that our principal had been reduced and our lower monthly payments would start coming directly out of our checking account a couple payment cycles later. This time, we knew to look in his spam folder right away. My signing prompted the mortgage provider's system to email my signed documents to my husband-because he is also on the mortgage and needed to sign. I also needed to upload a picture of my government-issued photo ID. We had to e-sign some paperwork Once I fished the email out of my spam folder, I electronically signed the required documents. We mailed a signed letter explaining our intentions (Please take a lot of our money now so we can start paying less each month) and included the 2 checks in the envelope. We had to mail payments and a letter The email confirmation contained info on where to mail the processing fee check as well as the lump sum check that we wanted applied to our principal. We got an email confirmation This message reiterated the lump sum we wanted to put toward our principal and what our new monthly mortgage payments would be. They confirmed my email address and my husband's so they could send an agreement to us to sign. We had to give them info over the phone Once we were talking to the right person, they asked us how much we wanted to add to our principal. So pack your patience and choose a time when you have more than just a few minutes to spare if you can't request paperwork online. We had to call It took several minutes before I was connected to someone who both knew what recasting was and what our servicer's process was. Here's what the process looked like for us. ![]() We had to wait until after we made our first gigantic payment other lenders might have required more monthly payments or recasting within a certain time frame after closing. the minimum additional principal payment.who qualifies for recasting, based on your loan type.(I was still a cynical New Yorker after all.) I learned that my current lender may sell my loan to another lender quickly after closing, and different mortgage servicers have slightly different rules about: Many lenders may let you pay more than your minimum monthly payment, so you can keep whittling down the principal faster if you choose. Plus, you may be able to pre-pay your mortgage even after recasting. But it doesn't require a closing process-and the thousands of dollars that tend to go along with that-or restart the clock on your mortgage's duration (happy face).Īnother recasting benefit: If you didn't have the 20% down payment and therefore had to pay private mortgage insurance (PMI) on your loan, recasting-to the point of having at least 20% paid-may have removed the extra cost of PMI. ![]() Unlike refinancing, mortgage recasting doesn't change your rate (sad face). Along with that lump sum, you pay a processing fee of usually a couple hundred dollars, and then the lender recalculates your monthly mortgage payments based on the lowered remaining balance on your mortgage. ![]() Our broker explained that recasting, otherwise known as principal curtailment, is when you put a lump sum toward the principal of your loan after you've already closed on your home.īecause we'd have more money after we sold our New York house, we could use that for a lump sum toward our New Jersey home loan on top of the initial down payment. ![]()
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