Recasting your mortgage is now available at Choice One Mortgage! This is a really great feature and is available on any conventional loan (aka Agency or Fannie/Freddie) that we fund through Quicken Loans.

Let’s look at two scenarios where this can be really helpful.

Recasting Your Mortgage – a Purchase Loan Scenario

Let’s say you own a home and it’s listed for sale, but no offers are currently on the table. Next, you find an amazing property for sale that checks all of your boxes. The only problem is, your Realtor tells you it probably won’t last on the market for long.

For many, this would cause a problem because you need the money from the sale of your current to use towards the down payment for the new home. Waiting for your home to sell could mean that you miss out on the home of your dreams. And many sellers will not consider a “contingent sale” with non-contingent offers surely to come.

Well, we may have the solution for you!

If you have a minimum of 5% down, qualify for a new Agency loan and have sufficient income to qualify, you can buy the new home right away. When the old house sells, you can use the proceeds from the sale to reduce the balance on the new mortgage. We will then “recast” the loan without changing your rate and remaining term, and your payment moving forward will be recalculated using the new lower balance.

And you can do this without refinancing and incurring more closing costs!

Recasting Your Mortgage – a Refinance Scenario

Let’s say we got you a 30 year fixed rate loan, $400,000 at 3.999% in 2017. Then, you have the good fortune of coming into a large sum of money. Perhaps through the sale of another property. Perhaps through an inheritance. In either case, you would like to use that money to reduce your mortgage.

Normally, you would have to refinance and bring that money into escrow at closing. Your new loan would start over at the current interest rate.

What if rates were higher than 3.999%? Not great 🙁

And adding more payments with a new 30 year loan seems like a waste.

Well, you can now avoid all of this with by recasting your mortgage.

How Recasting Your Mortgage Works

When you put any lump-sum amount towards your principal balance, the experts at Quicken Loans can then recalculate the loan based on the new lower balance, using the same interest rate and time remaining from the original mortgage. And, you can do this as many times as you would like over the life of the loan!

Advantages to Recasting Your Mortgage

The interest rate and terms remain the same, but because your principal has decreased, your monthly payments will be lower, and you can save on interest paid over the life of the loan.

Recasting Your Mortgage – Details

• Qualify by having made a minimum of $10,000 in principal-reduction payments in the last 12 months. The program is not available to you if funds are received through the HHF or HAMP 6-year incentive.
• Request recasting as often as you’d like during the life of the loan.
• Make the first two consecutive monthly payments before your loan is eligible to recast.
• Make current payments until the recast is complete, from 45 to 60 days.
• Begin making the lower monthly payment once you receive your updated billing statement.
• Pay only $100 to recast.
• Apply for recasting only for agency loans. Not available for Agency Plus loans, Interest Only ARM loans or jumbo loans.

Click on the image below to see our flyer about recasting your mortgage.

Call Bill Lewis today to learn more!