Recast Your Mortgage: Unlock Hidden Savings and Boost Your Budget
Buying a new home is exciting, but navigating the financial dance between your current home and your dream digs can be tricky. Should you sell first? Buy first and rent your old place? There's another option worth exploring: mortgage recasting.
What is Mortgage Recasting?
Instead of selling your existing home before or after buying your new one, mortgage recasting lets you hold onto your current property while reaping the financial benefits of its equity on your new one. Here's how it works:
You purchase your new home with a regular mortgage.
You use the equity from your current home (through a sale or a line of credit) to make a lump sum payment on your new mortgage.
Your lender recalculates your monthly payment based on the lower principal balance, resulting in a significant reduction in your payments!
Benefits of Recasting:
Lower monthly payments: Free up cash flow for renovations, travel, or simply building financial security.
Improved debt-to-income ratio: Become a more attractive borrower for future loans.
No need to sell immediately: Take your time finding the perfect buyer or move into your new home while selling the old one.
Keep reaping the benefits of your current home: Continue collecting rent or enjoy your property until you're ready to sell.
Is Recasting Right for You?
Consider these factors:
Do you have enough equity to make a significant impact on your new mortgage principal?
Do you have the funds for closing costs and down payment requirements on the new home without selling your current home?
Are you comfortable possibly managing two mortgages in the short term, while waiting for your current home to sell?
Talk to your mortgage loan officer or a financial advisor to assess your situation and determine if recasting is the right move for you. This blog post offers a high-level overview, but professional guidance is crucial for making informed financial decisions.
Recasting can be a powerful tool for savvy homeowners looking to maximize their equity and enjoy financial flexibility while navigating their journey to their dream home. Do you think recasting might be the key to unlocking your financial goals?
Contact one of our licensed loan officers if you are interested in taking advantage of this option after your loan closes. Our team can help prepare you with the steps you need to take once you’re ready to make this step, and set you up with the right lender who allows for Mortgage Recasting!
