RECASTING- WHAT IS IT? | Edna Wilson's Real Estate Blog
What is recasting? Well, it's not a fishing term, I'll tell you that. But I have lots of customers, especially right now, that have tons of equity in their house, and when they go to buy the other house, they might not have sold the first house yet. And so there's this thing called recasting. So let me break this down for you.
What happens is you go ahead and purchase the other house, you might have, I don't know, three percent down what you have because you don't have a lot of money yet because you haven't sold the first house, right? You go ahead and get that first mortgage, then when you pay off the original house, you suddenly have $200,000, let's say. Well, you can actually call your mortgage company and say, "I want to recast my loan." So what that does is, it doesn't change your interest rate, it doesn't change many of the terms, but what it does change is the principal amount your payments are based on.
So in my case, I just recently did this for myself. My payments went from, let's say, $2,000 a month to like $1,400 a month because I was able to put this big chunk down on the house. It really makes a difference, and it's a way for you to get lower payments long term simply by just using the word "recast."
If you have any more questions, be sure to reach out to me, Edna Wilson, your Hometown Realtor. As hometown as apple pie.
