https://www.youtube.com/watch?v=4BvY-tW0Mj4

1. Introduction:

• Brent Rasmussen, the host, introduces the topic of mortgage recasting, a term gaining popularity in mortgage management.

2. Recasting vs. Refinancing:

• Clarifies that recasting a mortgage is different from refinancing. Recasting involves readjusting the loan principal after closing, not changing the loan terms or interest rates.

3. Purpose of Recasting:

• Recasting is used in scenarios where a borrower has significant equity in a property or has come into a substantial sum of money.
• It's a strategy to reduce the loan amount, thus adjusting the mortgage payment to be more manageable.

4. Common Scenarios for Recasting:

• Often used when someone purchases a new home but hasn't yet sold their previous one.
• Applied when the homeowner receives equity from the sale of the old home and wants to apply it to the new home loan.
• Also suitable for individuals who inherit or save a large sum they wish to use to reduce their mortgage balance.

5. Mechanics of Recasting:

• Available for conventional loans at any point during the loan's lifetime.
• A one-time opportunity that can be availed after building substantial equity, not restricted to the early months or years of the loan.
• For example, on a $300,000 loan, if the borrower can recast with $200,000, the loan amount is adjusted to $100,000, leading to significantly lower monthly payments.
• Recasting helps in removing Private Mortgage Insurance (PMI) if the down payment is more than 22%, reducing the loan-to-value ratio to 78% or less.

6. Benefits of Recasting:

• The interest rate remains unchanged from the initial closing.
• Lowered loan amount leads to reduced monthly payments.
• Involves filing a new deed of trust and promissory note to protect the lender's interests.

7. Recasting in Seller's Markets:

• Particularly useful in busy seller’s markets, where contingency offers might not be feasible.
• Allows buyers to put down a minimum amount initially, then lower the principal balance after selling their old house, facilitating the purchase of a new home and subsequent reduction in loan payments.

8. Contact Information:

• Brent encourages viewers with further questions to contact his team at 402-991-5153.
• Additional resources are available on their YouTube channel and website (mtg-specialist.com), offering educational content and guidance on mortgage decisions.

9. Sign-off:

• The segment ends with a thank you message from Mortgage Specialists, highlighting their commitment to being driven, trusted, and reliable.

[Music] Hey guys, welcome back to another week of Mortgage Matters in Minutes. I'm your host Brent Rasmussen, and in this week's episode, we're talking about recasting. This term has become quite common in recent years when it comes to obtaining a mortgage and potentially adjusting your mortgage loan after you've closed.

First of all, it's important to clarify that recasting is not a refinance. We often receive questions about what recasting is, and it's actually quite simple. Recasting involves readjusting the amount that you owe, specifically the loan principal, after closing.

So, why is recasting used? Recasting is frequently employed when you haven't sold your current property and you have a significant amount of equity tied up in it. This could also apply if you've inherited or saved a substantial sum of money and you want to reduce your loan amount. Essentially, recasting is a readjustment of what you owe to a particular lender, which in turn adjusts your mortgage payment.

Now, let's delve into why people choose to do it. People often use recasting after they've purchased a new home, sold their previous one, and received the equity. They may want to roll that equity into the new home loan while keeping their monthly payment manageable. Additionally, individuals who inherit or save money may decide to use it to pay down their loan balance, resulting in a more affordable future payment.

For a recast, you can do it one time on a conventional loan at any point over the life of the loan. You aren't limited to doing it within the first few months or the first year. However, many people opt for a recast shortly after obtaining their home equity to increase their down payment and adjust their future payments. If you put down more than 22 percent, it will remove the Private Mortgage Insurance (PMI) because, after closing, once your loan balance reaches 78% loan-to-value, your mortgage insurance will come off. Please note that this applies to recasting on a conventional loan.

So, how does recasting work in practice? Let's say you start with a loan amount of $300,000, and suddenly you have $200,000 to recast with. You contact the lender, fill out the paperwork, and supply them with the $200,000. Now, your loan amount goes from $300,000 to $100,000 because you've put down $200,000. The lender then calculates a new principal and interest based on the $100,000 loan. As a result, your monthly payment will drop significantly from what it was when you had a $300,000 loan.

It's important to note that recasting won't change your interest rate; it will remain the same as when you initially closed the loan. You're essentially lowering the loan amount and filing a new deed of trust and promissory note to ensure that the lender's risks are still protected.

Recasting is being used more frequently, especially in busy seller's markets where contingency offers are not allowed. In such cases, you might put down the minimum amount for your new loan (e.g., 5% down) and, once you sell your old house, you can lower your principal balance. This way, you can achieve your goal of getting the new house, having your offer accepted by the seller, selling your old house, and reducing your loan payment.

If you have any more questions about recasting, getting pre-approved, or any mortgage-related needs, feel free to reach out to us at 402-991-5153. You can also find us on YouTube, where you can access additional videos that provide education and guidance on making the best mortgage decisions. Our website is mtg-specialist.com, where you can explore blogs and more information. Thank you for checking us out, and have a great day!

We'll see you soon, Mortgage Specialists Driven, Trusted, Reliable