Recast mortgage- quicken loans?

[tealblue]

All the refi questions made me start looking around to see what kind of rates I could get on a refi.

I talked to Quicken loans who said with their loans, if you pay $10k extra over like 12 months, you can pay a $100 fee to get the loan recast? Has anyone done this and was it super easy?

Between tax refunds and my annual bonus, we usually have an influx of money in the spring that I pay down our HELOC (have been using this to pay for some home renovations), but the Quicken guy said we could pay that off and then recast the loan when I throw my bonus onto the loan every year.

[hazelden]

Did he explain the benefits of recasting your mortgage? From my understanding you keep the same rate and payoff date with a recast. So if your mortgage payoff date is in 2030 and you pay an extra 10k this year and don't recast you would pay less interest over the life of the loan and may end up paying your mortgage off in 2028. If you decide to recast after paying an extra 10k you keep the same payoff date but reduce your monthly payment going forward and pay less interest.

We have a really low rate so I wouldn't choose to dump a bunch of money into our mortgage since that makes it really hard to access that money in the future.

[tealblue]

Yes you are right that you keep the payoff date and the same rate with a recast. But your payments drop once it’s recast.

So if I borrow $150k, get a $20k bonus in the spring and drop that into the mortgage and get it recast, my payments may drop from from $750 to $600 or something (I made that up).

The issue I’m having is we just finished a remodel and are cash poor. We expected our roof to last us another several years but we aren’t able to patch the leaking issues because apparently our current roof wasn’t put on correctly or they didn’t put down something before they roofed. So if I did nothing with my mortgage, I would pay for my roof with our HELOC (which is at a variable prime rate) and then make my monthly payments plus dump bonuses/tax money/whatever to pay it down quickly. This guy suggested taking money out in my refi (I’m looking at refinancing to a 15 yr mortgage), so I’m financing my roof at 3.25% instead of 5%+ prime now. And if I get a bonus, I can pay it towards the mortgage to knock that down and drop my payments down.

We currently have a 30 year mortgage at 3.875% (23-24 years left) and the refi cost is pretty immaterial to the total amount of interest I’d save dropping my payment. Plus we’d pay off our mortgage by the time my oldest is in college and the youngest would be in highschool. I’m just torn and don’t like making decisions.

[sandandsea]

We recast our mortgage a couple of years ago and are planning on doing it again. We sold a chunk of stock and used it to pay down the mortgage. Kept the same end date and interest rate but lower monthly payments. We wanted more monthly cash flow so it worked for us. We also have a low interest rate and aren’t worried about the loan length so it made more sense for us than just paying a lump sum and taking years off the end of the loan.

ETA. We have Chase and there was no charge for the recast.

[sandandsea]

Nov 1, 2019 10:51:49 GMT -5 hazelden said:

We have a really low rate so I wouldn't choose to dump a bunch of money into our mortgage since that makes it really hard to access that money in the future.

You could save the difference in monthly payment amounts. So instead of putting the extra payment towards the mortgage with a higher payment, you could invest it elsewhere so you have the benefit of a lower payment while also having the additional savings easily assessable for the future.