The average home price in 2019 was $269,039. While this varies from month to month, homes always cost a lot.
If you own a house and have a mortgage, you might experience a time when considering reamortizing it. When you reamortize your mortgage, you change the payment amount.
While this is similar to refinancing, it is not the same thing.
If you are interested in learning more about what this means and how long you should wait before doing it, continue reading this article to learn more about this process.
The Basics of Reamortizing a Mortgage
Reamortizing a mortgage is something you can do to change your required monthly payment amount. Many lenders refer to this process as mortgage recasting.
The process is some what similar to refinancing, yet it has many differences. The main difference is that recasting does not require getting a new loan, whereas refinancing does.
When you reamortize your loan, you create a deal with your current mortgage lender to lower your monthly payments. You can only do this if you pay a lump sum of money on your mortgage balance.
When you pay a lump sum of money, it dramatically reduces your mortgage balance. If you continue paying your mortgage as agreed, you will repay it much sooner than your original terms.
If your main goal is to reduce your monthly payments after paying a lump sum, you can ask your lender about reamortizing your mortgage. If your lender approves it, they will calculate your new monthly payment.
Lenders base the new monthly payment on the balance of your loan, the interest rate, and the remaining number of payments. Once they tell you your new loan amount, you can begin paying that each month.
Paying the new amount will not allow you to pay off your mortgage early, but it will make your payments more affordable.
One last thing to note is that recasting a mortgage does not change any of your terms. In other words, you will still have the same interest rate and the number of remaining payments. The only difference is the payment amount.
Reasons You Can Reamortize Your Mortgage
Someone would reamortize a loan after paying a lot of money on the loan balance.
The prime example of this is when a person buys a house before selling their current one. Once they sell their current home, they might make a profit from the sale. They may take this profit and apply it to the new loan.
If you decide to do this, you can knock down your mortgage balance instantly. So, if you are wondering when to reamortize your mortgage, you should know that you must wait until you pay a lump sum on it.
You can also pay a lump sum for other reasons. For example, if you receive an inheritance check from a loved one, you could use this money to lower your mortgage balance.
It doesn’t matter where you get the money. If you have access to some extra cash, you can apply it to your mortgage anytime you wish.
How Long You Should Wait Before Using This Process
The next thing to know is how long you should wait before reamortizing your loan. Before you can use this process, you must make a lump sum payment, and the amount must meet the lender’s guidelines.
Lenders won’t let you recast your loan unless you pay enough toward the principal balance. Most lenders require around $10,000 to qualify for a mortgage reamortization, but you can ask your lender to learn their rules.
Secondly, you must wait until the payment clears. The payment should clear within a few days, and you can see this when this occurs by checking your loan balance. Where to buy Levitra online? http://www.wolfesimonmedicalassociates.com/levitra/
Next, you should make sure you talk to your lender about this during the year in which you made the payment. If you wait until the following year, you might not qualify for mortgage recasting.
Therefore, you should wait until you meet the requirements, but you should not wait too long.
The Steps Required When Reamortizing a Mortgage
Now that you understand the basics of reamortizing, you might wonder how to reamortize your mortgage. Here are the steps you should take if you want to do this:
Determine the Right Time to Reamortize
First, you should determine when to reamortize your mortgage. You can base your decision on the information in this article. Once you decide you are ready, you can move on to the next step.
Contact Your Lender
When you are ready, you will need to contact your lender. When you contact them, you can tell them that you’re interested in recasting your loan. They will explain what you need to do and how to do it.
Wait for the Lender to Process It
Once you complete the steps the lender requests, you’ll have to wait for your lender to process it. It might take around one month for this to occur.
Start Making Your New Lower Monthly Payments
When your lender completes the process, you can begin making your new payments for your mortgage loan.
While this process takes a few weeks to complete, you will only have to go through it once, and it is not a complicated process.
The Two Main Benefits of Reamortizing
Reamortizing your mortgage offers two main benefits.
The first is that it provides a way to lower your payments. If you lost your job and earned less from your new job, this might be the answer you seek to solve your financial issues.
The second benefit is that you will pay less interest in all for your loan. By paying toward your principal balance, you will pay less interest because you owe less money.
Learn More About Your Loan Options
Learning what reamortizing a mortgage means is a great place to start if you want to apply a lump sum of money toward your mortgage balance.
If you want to reamortize your mortgage, you can learn more by contacting us. We offer all types of loans and options, and we can help you find the best one for your situation.
At 7th Level Mortgage, we are an experienced team of mortgage professionals based out of New Jersey and serving the east coast from Pennsylvania to Florida, including Delaware and Maryland. We have won numerous awards for our excellent professional work and reputation with clients for being extremely diligent, accessible, and hands-on throughout the entire mortgage process.