Interest rates on refinance loans have been rising in recent months and many are looking for other ways to reduce costs. As a result, recasting, or “re-amortization,” may be able to benefit qualified consumers.
“People don’t really know about it,” Alan Rosenbaum, the founder and chief executive of the Guardhill Financial Corporation in New York, told The New York Times. “But it’s become more common recently.”
Recasting typically costs around $150 and can also help consumers avoid closing costs or additional credit checks, which can then hurt credit scores, the news source says. Under this method, homeowners can put down a large upfront sum, which in turn reduces the principal and lowers monthly payments and interest rates.
By paying $20,000 on a principal, consumers could cut their payments by $52 per month and save thousands more through reduced payments in the long run.
However, homeowners can also put down smaller amounts through their lenders as well. By putting some money down now, consumers could help ensure they are able to meet their monthly bill payments while reducing the risk of late credit credit card expenditures.