Recently the New York Times printed an interesting article on the concept of “recasting” as a means of lowering mortgage payments. From the article:
“A little-known strategy, called “recasting,” or “re-amortization,” is available through some mortgage lenders and servicers. It involves paying off a lump sum of the principal amount and asking to have the monthly payments reset according to the original interest rate and loan terms. The lump sum reduces the principal, so your new monthly payments decrease slightly and you save on interest paid over the life of the loan.”
One of the primary appeals of recasting is that it typically involves no (or a small) fee and doesn’t require the credit requirements of refinancing.
Recasting works well for those unable to qualify for refinancing amid the ever-toughening credit guidelines — perhaps because they are self-employed or have less-than-stellar credit — as well as for those with extra cash, like a year-end bonus.
For the full article visit this link.