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Post by fiddlesticks on Apr 12, 2016 19:41:07 GMT
Has anyone ever recast their home loan? I was just presented with an opportunity for a dream job but it is for significantly less money. But seriously, it is my dream job. We just received an inheritance and we are considering using part of the money to recast the loan so our monthly payment is less. We are not going to lengthen the term of our loan. We just refinanced last year for a 15 year loan and are good with that time in terms of our kid heading to college and retirement needs.
It doesn't sound like it is something that people often do but was wondering if anyone had any experience with it?
TIA!
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mimima
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Post by mimima on Apr 12, 2016 19:56:28 GMT
I've never heard the term, but I would probably be more likely to put the inheritance in a savings account and draw a monthly amount out to be part of your payment, earning interest in the meantime
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Post by anniefb on Apr 12, 2016 20:00:10 GMT
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freebird
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Post by freebird on Apr 12, 2016 20:00:47 GMT
I've never heard the term, but I would probably be more likely to put the inheritance in a savings account and draw a monthly amount out to be part of your payment, earning interest in the meantime yep. that's what I'd do. You draw interest off of it and you wouldn't have any refinance fees (never heard of recasting) |
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Post by anonrefugee on Apr 12, 2016 20:05:56 GMT
I'm not familiar with term. Are you trying to maintain a mortgage balance to help financial position and college financial aid?
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Post by fiddlesticks on Apr 12, 2016 20:07:11 GMT
I hadn't heard of this either until today. It sounds like that isn't done very often. I read that article earlier today and it was one of the things that made me think it might be the right option for us. I really like having things automated so I think it could be helpful to do the work upfront to lower the payment and then just have the lower payment pulled out every month. |
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freebird
Drama Llama
'cause I'm free as a bird now
Posts: 6,927
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Post by freebird on Apr 12, 2016 20:13:47 GMT
I hadn't heard of this either until today. It sounds like that isn't done very often. I read that article earlier today and it was one of the things that made me think it might be the right option for us. I really like having things automated so I think it could be helpful to do the work upfront to lower the payment and then just have the lower payment pulled out every month. With my bank account and online banking, I can have it automate something like that for me. Every month it pulls out $xx and puts it into another account on XX day. I don't know if it would be worth what it's going to cost to have it re done just for the "convenience" of it all. |
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keithurbanlovinpea
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Flowing with the go...
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Post by keithurbanlovinpea on Apr 12, 2016 20:20:12 GMT
Typical "recasting" would require your mortgage documents to be amended, and this is something that has to be 1) allowed by your loan documents, 2) handled by your servicer, and 3) approved by the lender.
If you have a conventional mortgage, I can tell you with 99% certainty that this is not allowed. A non-conventional loan, maybe. But be prepared for lots of paperwork and several weeks (maybe months) to approve it. Most lenders will not recast because it means a change to the interest structure, and if your loan is in a pool the tranche may not allow for it, yada yada. You certainly would not want to reveal your motivation being that you have less income either.
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Post by fiddlesticks on Apr 12, 2016 20:37:18 GMT
I hadn't heard of this either until today. It sounds like that isn't done very often. I read that article earlier today and it was one of the things that made me think it might be the right option for us. I really like having things automated so I think it could be helpful to do the work upfront to lower the payment and then just have the lower payment pulled out every month. With my bank account and online banking, I can have it automate something like that for me. Every month it pulls out $xx and puts it into another account on XX day. I don't know if it would be worth what it's going to cost to have it re done just for the "convenience" of it all. That's a very good point. I suppose that could be done. I haven't looked into automatic transfers but that would certainly be a good way to go about it. Thank you! |
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Post by fiddlesticks on Apr 12, 2016 20:39:24 GMT
Typical "recasting" would require your mortgage documents to be amended, and this is something that has to be 1) allowed by your loan documents, 2) handled by your servicer, and 3) approved by the lender. If you have a conventional mortgage, I can tell you with 99% certainty that this is not allowed. A non-conventional loan, maybe. But be prepared for lots of paperwork and several weeks (maybe months) to approve it. Most lenders will not recast because it means a change to the interest structure, and if your loan is in a pool the tranche may not allow for it, yada yada. You certainly would not want to reveal your motivation being that you have less income either. Good to know!!!! Thank you! We aren't trying to be dishonest in any way. Just looking at ways to lower our monthly outgoing money and since our house is our only debt (and biggest monthly expense) we thought we would start the conversation with that of whether my job opportunity is even feasible! |
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keithurbanlovinpea
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Flowing with the go...
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Post by keithurbanlovinpea on Apr 12, 2016 20:48:26 GMT
Typical "recasting" would require your mortgage documents to be amended, and this is something that has to be 1) allowed by your loan documents, 2) handled by your servicer, and 3) approved by the lender. If you have a conventional mortgage, I can tell you with 99% certainty that this is not allowed. A non-conventional loan, maybe. But be prepared for lots of paperwork and several weeks (maybe months) to approve it. Most lenders will not recast because it means a change to the interest structure, and if your loan is in a pool the tranche may not allow for it, yada yada. You certainly would not want to reveal your motivation being that you have less income either. Good to know!!!! Thank you! We aren't trying to be dishonest in any way. Just looking at ways to lower our monthly outgoing money and since our house is our only debt (and biggest monthly expense) we thought we would start the conversation with that of whether my job opportunity is even feasible! I totally understand. I would start by reading through your loan documents to see if you can even consider it. If your income does indeed get reduced, and you don't want to pursue a recast (or can't) you could consider applying for a modification, although I would not recommend it. I agree with other posters though. Put the $ in an account and use the interest (and principal when needed) to cover expenses and/or pay down your mortgage. |
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May 19, 2024 7:29:08 GMT
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Post by Deleted on Apr 12, 2016 20:54:41 GMT
I'd compare what I would make on savings interest vs the interest rate on the mortgage. And look at what fees/closing costs you will have and whether there will be enough savings to deal with that. Yes, you will lower your payment, but will your interest rate increase? Lower loans can sometimes get higher interest rates. That happened on a home equity loan for us so we took more than needed and made a huge balloon payment within the first few months.
Do you want to shorten the length or just reduce the payment? We pay extra each month, but our goal is shortening the time frame, not so much lowering the payment.
Psychologically I can understand wanting to lower the payment and/or shorten the length though....just at what cost?
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Post by joblackford on Apr 12, 2016 21:00:54 GMT
This comment is probably of no help to anyone, but I have never heard of recasting. Ok, back from reading the link above and OK, I get it. Rather than using the money to pay ahead on your mortgage to reduce the term, you can use it to reduce the monthly cost... that sounds reasonable if the lender allows it. Can't hurt to ask if there's no/minimal fees to pay to have them consider it. I guess the only thing would be, is there a chance you will have a big change in your life and decide to sell the house? In that case it might be better to have kept the inheritance money available rather than tying it up in your loan. I'm assuming that you already have a 6 month emergency fund (sorry, channeling my inner Suze Orman!)
btw I raised my eyebrows at the comment by @minima - what is this "saving account interest" of which you speak? lol. Our savings accounts barely pay 1% ? last I looked. Way below the mortgage interest we pay (which in our case is actually absurdly low -- like, the title company lady's eyes bugged out when she saw our rate, low!). Not meaning to criticize or suggest that your advice is not good advice, by any means. I just haven't heard anyone talk about earning interest in so many years...
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Post by anniefb on Apr 13, 2016 2:45:08 GMT
This comment is probably of no help to anyone, but I have never heard of recasting. Ok, back from reading the link above and OK, I get it. Rather than using the money to pay ahead on your mortgage to reduce the term, you can use it to reduce the monthly cost... that sounds reasonable if the lender allows it. Can't hurt to ask if there's no/minimal fees to pay to have them consider it. I guess the only thing would be, is there a chance you will have a big change in your life and decide to sell the house? In that case it might be better to have kept the inheritance money available rather than tying it up in your loan. I'm assuming that you already have a 6 month emergency fund (sorry, channeling my inner Suze Orman!) btw I raised my eyebrows at the comment by @minima - what is this "saving account interest" of which you speak? lol. Our savings accounts barely pay 1% ? last I looked. Way below the mortgage interest we pay (which in our case is actually absurdly low -- like, the title company lady's eyes bugged out when she saw our rate, low!). Not meaning to criticize or suggest that your advice is not good advice, by any means. I just haven't heard anyone talk about earning interest in so many years... Invest in New Zealand  3.2% for a 6 month term deposit with interest paid monthly. |
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knitnakinva
Shy Member
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Post by knitnakinva on Apr 13, 2016 11:12:33 GMT
We recast our mortgage about 5 years ago. We hadn't sold our old house when we moved into the new, so when it did sell a few months later, we took the profit and recast the loan on our new house. It was very easy, with no cost involved. I would talk with your lender and see what the process is if you're interested. It was a great decision for us!
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Post by Spongemom Scrappants on Apr 13, 2016 11:32:28 GMT
We recast our mortgage about 5 years ago. We hadn't sold our old house when we moved into the new, so when it did sell a few months later, we took the profit and recast the loan on our new house. It was very easy, with no cost involved. I would talk with your lender and see what the process is if you're interested. It was a great decision for us! I recast a mortgage loan many years ago under similar circumstances. Within the first year of the loan, I used $40,000 from an inheritance to add to the equity and they recast the loan as a result. There were no fees involved with mine either. |
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3.2% for a 6 month term deposit with interest paid monthly. 