Save by Recasting Your Loan

Seeking the inside scoop on all things financial, we reached out to M Realty's preferred lending partner, Guild Mortgage's Brent Lucas, to get the details on loan recasting:

Refinancing your home loan can be expensive. Depending on your situation, recasting your loan lowers your monthly payments while offering several advantages.

What is recasting?

You apply a lump sum payment to your loan to lower your monthly payments without changing your interest rate or term of the loan.

Advantages

> No Appraisal Required > No Credit Check > Interest Rate Stays Locked > Recasting Generally Costs Under $400

When to Recast

When there are multiple offers on a home, contingent offers (where the offer is contingent on the sale of the buyers' current home) are weaker than traditional offers. Buyers in this situation will often raise their contingent offers by several thousand dollars to make it more attractive.

If the buyers instead took out a separate loan for their new home, they could make a stronger offer without raising it substantially. Then they could sell their original home and recast the loan on their new home with a substantial lump sum payment. In this case, they would have saved potential thousands of dollars by not making a contingent offer and avoided additional thousands in refinancing costs.

In Conclusion

While not perfect in every situation, it's important to know the advantages of loan recasting when making decisions as a home owner. Used strategically, recasting your loan instead of refinancing can save you thousands.

If you'd like to know more about the specific eligibility requirements for loan recasting, now is the perfect time to reach out to your favorite real estate agent to be connected with a financial professional like Brent.