Union Home Mortgage is our preferred lender partner when our clients ask for help finding a mortgage lender. We have worked countless times over the years with the wonderful Julie Miller at UHM and she recently shared information with us about their product, the RECAST mortgage loan. This loan product is powerful in this busy real estate market and here’s why…
In a Seller’s Market, our current market, a Buyer needs to have the strongest offer to win the contract. If you are looking to purchase a home and you need to be able to sell your current home to qualify for the new purchase, that means you will have to make your offer with a “contingency” on your current house selling. In a multiple offer situation, a contingency will most likely lose out to a Buyer offering without that stipulation.
Here’s where the Recast Loan saves the day!
“Recasting” a mortgage means making a lump sum principal payment and then asking to have your monthly payments recalculated/reduced/re-amortized according to the original interest rate and maturity date. With the recast loan, a Buyer can sell their existing home after the purchase transaction closes on their new home, eliminating the contingency stipulation when making an offer. Using the proceeds from their original home sale, the Buyer can then make a lump sum principal reduction payment so that their monthly mortgage payment can be reduced to the new lower loan amount at the existing low rate and term that they locked in at initially. The Buyer has simultaneously saved money and had the financial freedom to purchase their new home without having to sell their existing home first!
Another benefit to the recast loan is that it can be used to pay the mortgage loan balance down to 80% Loan to Value or less, to be able to remove the private mortgage insurance (PMI) fee from the loan. AND there is no limit to the number of recasts during the life of a loan!! There is a simple, one -time low payment of $250 for the document prep and recording! That’s it!
It’s awesome to have a local lender with products as great as the recast loan to offer to our customers. If you have any questions about this particular loan option, or any other real estate topic that’s on your mind, contact us!