Can I recast my mortgage, not ReFi?

Can I recast my mortgage, not ReFi?

PostBy: leowis1 On: Sat Apr 11, 2009 12:17 pm

Hi All,

I would sure like to take advantage of these low interest rates, but I don't feel like going through all the BS. My current rate is 5.25%. I'm 4 years into a 30yr mortgage. I have great credit and lots of equity in my house. (I hope :shock: :D ) Has anybody called their lender and asked them to recast your mortgage? That is reset the term (30years) and adjust the interest rate? I don't want to go through title insurance and appraisels. I think that if you have lots of equity and great credit than this is a buyers market. Let me know. Thanks!

Leo
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Re: Can I recast my mortgage, not ReFi?

PostBy: mikeandgerry On: Sat Apr 11, 2009 12:56 pm

leowis1 wrote:Hi All,

I would sure like to take advantage of these low interest rates, but I don't feel like going through all the BS. My current rate is 5.25%. I'm 4 years into a 30yr mortgage. I have great credit and lots of equity in my house. (I hope :shock: :D ) Has anybody called their lender and asked them to recast your mortgage? That is reset the term (30years) and adjust the interest rate? I don't want to go through title insurance and appraisels. I think that if you have lots of equity and great credit than this is a buyers market. Let me know. Thanks!

Leo


No one has a lot of equity in their home if they are only five years into a 30 mortgage unless they put a lot of money down. Generally PMI is not required after you have 20% equity in your home compared to the purchase price. Lenders are not obligated to recast loans. Under the bailout provisions they may be court ordered. In your case, unless you have a jumbo mortgage that you bank wants to hold, they probably won't do it. You have to threaten to refi with another bank and be a preferred customer. If you can achieve a reduction in principal, that would be ideal, but not likely.

Generally, a reduction in rate is going to cost you a point, i.e. if you have a 100k mortgage, to go from your current 5.25% to the national average of 4.87 you will need to pony up $1000 (1%) in cash plus the fees of appraisal and filing and whatever other fees your bank charges in order to save 3/8% on your payment. You will probably get $1500 invested in saving $23/month. Thus, you won't "save" any money for 5.5 years. In contrast, by just putting that $1500 on your "principal only", you'll end a thirty year mortgage 16 months earlier.

My questions to you are: 1) can you make your payments now? 2) how much equity do you have? 3) What rate can you achieve and will it be fixed or variable 4) how much will points cost you 5) How much cash can you put towards points or equity 6) how long do you intend to be in this home?

In general, people should shoot for a 15 year mortgage to build equity faster and reduce lifetime interest expenses. Since you will likely achieve minor interest rate changes, it may be better to use your home as a savings vehicle by increasing your principal payments and reducing your savings account. If you need cash later, you can get a home equity loan. The road to ownership isn't paved with low rates, it's paved with more cash down, shorter terms, and bigger payments.
Last edited by mikeandgerry on Sat Apr 11, 2009 1:45 pm, edited 5 times in total.
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Re: Can I recast my mortgage, not ReFi?

PostBy: mikeandgerry On: Sat Apr 11, 2009 1:11 pm

Please delete...duplicate post.
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Re: Can I recast my mortgage, not ReFi?

PostBy: Freddy On: Sat Apr 11, 2009 2:34 pm

mikeandgerry wrote:Please delete...duplicate post.


NO! You hit the nail on the head and it's worth repeating. *smile*

I think the old standby still stands... if you can drop two percentage points, it's worth refinancing. Other than that, the money you spend to play their game is better off just put toward the principal. You're rate right now isn't bad...just wait a few yrs, you'll be happy as soon as they get back up to 7 or 8%!
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Re: Can I recast my mortgage, not ReFi?

PostBy: mozz On: Sun Apr 12, 2009 8:32 am

Just refinanced in March. Was 6.875 for 30 year, now is 4.5 at 15 year. My payments went up $50/month and i give $100 extra principal so i should be 11 years away. I did have to pay for 1 point. I've never heard of recast.
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Re: Can I recast my mortgage, not ReFi?

PostBy: KLook On: Sun Apr 12, 2009 9:10 am

I am undergoing REFI now. I dropped from 7.99% to 4.25%. Dropped my payment a bunch. 15 year mortgage. It is on a second property I own, not my primary home. Anyone out there want a waterfront house(Tidal river) with direct access to the new Rails to Trails snowmobile/hiking/Atv/whatever trail system? Right close to a store and post office in quiet town.

Kevin
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Re: Can I recast my mortgage, not ReFi?

PostBy: leowis1 On: Sun Apr 12, 2009 9:16 am

This is my 2nd home. I mad alot of money from the sale from my 1st house and rolled it into this house. I have probably better than 50% equity in this house. I can make my mortgage payments. But hey, I heat with coal. Which means that I'm smart with my money! :D If there's an opportunity to save, I'm going to look into it. I was curious about recasting because its less extreme that refi'ing.

I'm going to call my bank on Monday and see if anything can be done. I'll let you know. Thanks.
leowis1
 

Re: Can I recast my mortgage, not ReFi?

PostBy: av8r On: Mon Apr 13, 2009 10:38 am

Freddy wrote:
mikeandgerry wrote:Please delete...duplicate post.


NO! You hit the nail on the head and it's worth repeating. *smile*

I think the old standby still stands... if you can drop two percentage points, it's worth refinancing. Other than that, the money you spend to play their game is better off just put toward the principal. You're rate right now isn't bad...just wait a few yrs, you'll be happy as soon as they get back up to 7 or 8%!


I disagree, Freddy. I'm moving from 5.5% to 4.6% (this will be my 5th refi on this house). I'm cutting my term to 10 years and maintaining the same payment. I'll roll the $2000 of closing costs back into the mortgage and with all that I save about $20,000 in interest (if I pay this off to term) That same $2000 will not pay me back the savings I'll gain through this refi. Even making an extra payment per year won't get close. Those of you with 30 yr terms will benefit even more from a single point drop.

$100,000 mortgage financed at 5.5% over 30 years will cost you $104404.00 in interested payments (this doesn't include escrow, etc)
That same mortgage financed at 4.6% will cost you $84551.00 in interest over 30 years. That's about $20,000 in savings for an initial outlay of $2500 (or less) to refi.
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Re: Can I recast my mortgage, not ReFi?

PostBy: av8r On: Mon Apr 13, 2009 10:40 am

leowis1 wrote:This is my 2nd home. I mad alot of money from the sale from my 1st house and rolled it into this house. I have probably better than 50% equity in this house. I can make my mortgage payments. But hey, I heat with coal. Which means that I'm smart with my money! :D If there's an opportunity to save, I'm going to look into it. I was curious about recasting because its less extreme that refi'ing.

I'm going to call my bank on Monday and see if anything can be done. I'll let you know. Thanks.


I've tried to recast several times and each time the lender told me that they could not do it. Even when threatened with losing the loan to another lender they would not assist. This is why I've moved my mortgage several times in the last 13 years.

Best wishes
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Re: Can I recast my mortgage, not ReFi?

PostBy: titleist1 On: Mon Apr 13, 2009 12:02 pm

av8r wrote:I disagree, Freddy. I'm moving from 5.5% to 4.6% (this will be my 5th refi on this house). I'm cutting my term to 10 years and maintaining the same payment.


I am not understanding the math here, how are you dropping 0.9% in interest, getting either a 10 or 20 year mortgage (I wasn't sure about the "term to 10 years") and keeping the same payment? When I run the numbers through bankrate's calculators, I don't come close to the $567 / month payment on a theoretical $100,000 mortgage for 30 years. I guess I am missing something, but can't figure out what.
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Re: Can I recast my mortgage, not ReFi?

PostBy: av8r On: Mon Apr 13, 2009 1:21 pm

titleist1 wrote:
av8r wrote:I disagree, Freddy. I'm moving from 5.5% to 4.6% (this will be my 5th refi on this house). I'm cutting my term to 10 years and maintaining the same payment.


I am not understanding the math here, how are you dropping 0.9% in interest, getting either a 10 or 20 year mortgage (I wasn't sure about the "term to 10 years") and keeping the same payment? When I run the numbers through bankrate's calculators, I don't come close to the $567 / month payment on a theoretical $100,000 mortgage for 30 years. I guess I am missing something, but can't figure out what.


My bad...The payment obviously can't stay the same. I think the diff on the balance we carry on the house was around $140/month more for the 10 year vs the 15 year. We already pay an extra payment plus each year split out over the 12 payments so to me, it's the same outlay each month. Sorry for the confusion.
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