Refinancing And Recasting: Two Ways To Lower Your Mortgage Payment

Are you in a situation where you are looking to lower the amount you pay for your mortgage each month? If so, you may be looking into mortgage recasting and refinancing. Here is what you need to know about these two options.

Mortgage Refinancing

One of the most well-known ways to reduce your mortgage payment is through mortgage refinancing. This is when you essentially get a new loan on your home that takes advantage of the lower interest rates that are currently available from a mortgage lender in your area. 

While a mortgage refinance can be done at any time, it may not be the best idea depending on your specific situation. A mortgage refinance can reduce your monthly mortgage payment, but it doesn't always save you money. It is wise to work with a mortgage lender and find out when the break-even point is on a mortgage refinance, and then determine if you are going to stay in your home beyond that point where it is worthwhile to do so.

A mortgage refinance still involves paying all of the same mortgage origination and closing costs associated with a home mortgage. A refinance also essentially starts over with the terms of the mortgage. This means that if you have paid into your mortgage for 7 years and decide to refinance as a 30-year mortgage, you'll be paying off that mortgage for 37 years if you see it go to completion.

Mortgage Recasting

Mortgage recasting is only an option if you have made additional payments towards your mortgage in an attempt to pay it off early. While additional payments will cause your mortgage to end sooner rather than later, recasting allows you to use those additional payments to reduce your overall monthly payment moving forward.

The end result of recasting is that your mortgage will go back to its original end date, but all those additional payments will be spread out across the remaining months. It ends up lowering your monthly payment, all without having to pay the fees associated with refinancing. This can make it very appealing to those people that simply need to lower their monthly mortgage payment because they've fallen on hard times. The good news about mortgage recasting is that you can continue to make additional payments towards your mortgage once you are able to do so again, which will lead to paying off the mortgage early. 


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