Many people refinance their mortgage with the hope of reducing your monthly payments, but there is a little known trick that can reduce your monthly mortgage bill without expensive and not likely to re-fi complications. The last thing the banks want you to do is shorten your loan to reduce your interest rate, or lower the interest paid on life: why is pushing refinancing. They want to sell a new mortgage with all the attendant costs and lock you up in another long term.
A reamortization, also known as a recast or a restriction modification director will lower your monthly payment without a new mortgage loan. The bank will recalculate the current mortgage (using the same term and interest rate) and lower principal and interest necessary in the future. During the life of the loan, total interest payments will also be lower. This strategy only works if you have been paying additional principal to your mortgage in recent years or if you have a lump sum now you want to pay.
Many loan officers do not even know what a reamortization is! And banks do not make it easy for you. They will charge a fee of about $ 200, and then drag things for a few months. They may even require that you have paid in advance for your mortgage one month in advance before their papers are shuffled. But if your monthly payment is significantly lower, it may be worth the effort. After recast your mortgage, you can still continue making payments additional capital and then do the process again in a few years.
If you decide that consolidation makes sense for you, be prepared:
- Have a lump sum (perhaps a work bonus or a tax refund);
- Call your mortgage company and locate your specialist recast and get a number of direct dial telephone and postal address;
- Ask them to calculate the amount of your new consolidated payment and quote the fee;
- Develop an application letter of the recasting (or whatever your bank flame) and send it along with the fee;
- Do not send your lump sum payment until they tell you exactly when and where to send it;
- The bank will send a letter must be notarized and returned before your next payment; and finally,
- Keep copies of everything!
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