mortgage

Supersaver does not need mortgage recast

Don TaylorQuestionDear Dr. Don,
I bought a house last year. I made extra payments toward home loan principal and brought down my principal from $180,000 to $145,000. Now, I want to recast my mortgage to lower my monthly payments so that I can pay more toward principal ($140 per month additional paid toward principal). Is this a good strategy?
-- Neela Networth

AnswerDear Neela,
That's great that you made such a big dent, $35,000, in your loan balance in such a short time span. Without the additional principal payments, you would have only reduced the loan balance by about $200 a month.

I'm not quite sure why you want to recast your home mortgage loan. The additional principal payments you've made have already changed the balance of how much of your mortgage payment goes toward paying the monthly interest expense and how much goes toward the repayment of principal. You can see this by putting the particulars into Bankrate's mortgage and amortization schedule calculator.

Homeowners usually want their lender to recast the mortgage when they've made a substantial dent in paying down the loan balance and need to have a lower monthly payment. You're planning on continuing to make additional principal payments, so you don't need the lender to recast the mortgage. If you're not trying to free up cash in your monthly budget, you don't need to recast your mortgage.

Ask the adviser

To ask a question of Dr. Don, go to the "Ask the Experts" page, and select one of these topics: "Financing a home," "Saving & Investing" or "Money." Read more Dr. Don columns for additional personal finance advice.
 

Bankrate's content, including the guidance of its advice-and-expert columns and this Web site, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this Web site is governed by Bankrate's Terms of Use.

News alert Create a news alert for "mortgage"

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
MORTGAGE & REAL ESTATE NEWSLETTER

Timely market news and advice for consumers ready to buy, sell or invest in real estate. Delivered weekly.

Blog

Holden Lewis

Cautious BofA heeds history

Remember the wise decision that Bank of America made in August 2001 in light of the decision it's making now.  ... Read more

advertisement
Partner Center
advertisement

Connect with us