What is Recasting and Refinancing a mortgage? Both offer benefits to home owners! Did you know this?

Confused about the difference between recasting and refinancing your mortgage? Don't worry, we've got you covered!
Recasting a Mortgage:
Recasting a mortgage involves making a large lump-sum payment toward the principal balance of your loan. This payment is typically made after the loan has been established and is often a substantial amount. Once the payment is made, the lender recalculates your monthly payments based on the reduced principal balance, resulting in lower monthly payments over the remaining term of the loan. It's important to note that recasting does not change the interest rate or the terms of the loan; it simply adjusts the monthly payments based on the reduced principal balance.
Refinancing a Mortgage:
Refinancing a mortgage involves replacing your current mortgage with a new one, typically to take advantage of better terms or interest rates. When you refinance, you apply for a new loan, which pays off the existing mortgage. This new loan may have a different term length, interest rate, or both, depending on your financial goals and the current market conditions. Refinancing can help you lower your monthly payments, reduce the total interest paid over the life of the loan, or even access cash by borrowing against the equity in your home.
Key Differences:
Purpose: Recasting is primarily used to lower monthly payments, while refinancing is often done to obtain better terms or cash out equity.
Process: Recasting involves making a lump-sum payment, whereas refinancing requires applying for a new loan.
Cost: Recasting typically incurs a small fee from the lender, while refinancing may involve closing costs, such as appraisal fees, origination fees, and title insurance.
Whether you choose to recast or refinance your mortgage depends on your financial situation, goals, and the options available to you.
If you would like to speak with me call or text 719-314-0005
Zack Tarbet - Mortgage Broker
Tarbet Mortgage Team - Powered By Edge Home Finance
NMLS 2040562
NMLS 891464
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