Mortgage Recast VS Principal Payment

[Beeshi]

Hello, I am interested to find out some of the pros and cons and/or benefits to doing a Mortgage Recast or Principal only payment.

I recently bought a home and I am in the process of selling my last home.

Here are the details;

Mortgage of new home
30 Year Loan - 266,000
Interest Rate - 5.875
Monthly Payment (includes property taxes, homeowners insurance, etc...) - 2,036

Profit from home sold after all fees and taxes - 50,000

I would like to use that 50,000 to put toward the mortgage of my new home, so I would like to decide which option would suit me better.

Any insight on how either option would have an impact on monthly payment, length of the loan, and interest savings is greatly appreciated.

Thank you

 

[whatyouwantfinally]

You'll need some more info (like how much you're currently able to deduct in taxes from interest payments and whether your mortgage has a prepayment penalty), but these 2 calculators should get you there.

Mortgage Payoff Calculator | GetLoans.com

How much interest can you save by increasing your mortgage payment? My free online financial calculator helps you find out.

www.getloans.com

Mortgage Loan Calculator | GetLoans.com

Mortgage Loan Calculator: determine your monthly payment, create an estimated amortization schedule and see how much interest you could pay.

www.getloans.com

 

[adjusterjack]

Any insight on how either option would have an impact on monthly payment, length of the loan, and interest savings is greatly appreciated.

Your P+I of $1573 results in total interest paid over 30 years of $300,456.

Reducing your loan balance by $50,000 to $216,000 shortens the life of the loan to 19 years and the total interest paid is $143,009. A savings of over $150,000.

Mortgage rates are still 5.5% to 6.4% so I doubt that you'll be able to get a recast to a lower interest rate.

Mortgage Rates Today: October 16, 2024—Rates Remain Fairly Steady

The current average mortgage rate on a 30-year fixed mortgage is 6.94% with an APR of 6.96%, according to Curinos. The 15-year fixed mortgage has an average rate of 6.07% with an APR of 6.10%. On a 30-year jumbo mortgage, the average rate is 7.03% with an APR of 7.06%. Current Mortgage Rates for Oc

www.forbes.com

Some might say that the tax deduction (if you get it) is important. I say it's not. Here's how I figure it, for example. Make $10,000, pay $2500 tax, keep $7500. Deduct $10,000 in mortgage interest, save $2500 off taxes. Where's the other $7500? In the pockets of the greedy money lenders. Which would you rather have? $2500 or $7500.

The idea is to pay off your house as quickly as possible to you have no mortgage payments when you are older. I've been mortgage free since 1998 (age 52).

Some might say keep the loan and invest the $50,000. Well, if you want safety, CD rates are dropping. Invest in the stock market? Sure, risk losing the whole thing due to stock market volatility. Or, leave it in a fund for 30 years and hope it does well.

Want safety and a sure thing. Pay down your mortgage by $50,000 and then add a hundred or two to your payments and get it paid off even faster.