THE DOWNLOAD MONEY MATTERS
Recasting is more straightforward than refinancing — and doesn’t require a credit check, appraisal, or extensive documentation like refinancing does.
contract is modified (re-amortized) to reflect your current loan balance, but the length of the loan doesn’t change. For example, let’s say your
original mortgage had these terms: $100,000 loan amount 6.5% interest rate 30 years, fixed payments
(360 months) Payment (principal plus interest)
= $632/month Now let’s say it’s been a year since
you took out the mortgage, you’ve paid off $2,000 of the principal, and you can afford to make an additional lump-sum payment of $33,000. Your mortgage payment can be
recast (recalculated) based on the current loan balance and remaining time left on the loan (348 months), but your interest rate stays the same. So, the recast terms would look
like this: $65,000 loan amount 6.5% interest rate (same rate) 29 years left (348 months) New payment (principal plus
interest) = $415/month That’s a 34% savings on your monthly payments!
HOW TO RECAST If you’re interested in recasting your loan, contact your mortgage company first and ask if your loan is eligible. Not all loans qualify, and not
all lenders offer recasting. If your mortgage servicer does not provide recasting, you won’t be able to do it. Also important: Recasting can
only be done for conventional loans. It’s not allowed for Federal Housing Administration (FHA), Veterans Affairs (VA), or U.S. Department of Agriculture (USDA) loans. Even some conventional loans do not include this feature, so check with
your mortgage servicer before you do anything else. Additionally, most lenders require
you to pay a lump-sum minimum of $5,000 to $10,000 to be eligible for a recast, although some lenders may use a percentage of the loan amount. You also will need to be current in your payments. All that said, recasting is more
straightforward than refinancing — and doesn’t require a credit check, appraisal, or extensive documentation like refinancing does.
DRAWBACKS There are times when a regular refinancing makes more sense than recasting. For instance, the fact that you aren’t changing the loan terms or reducing the number of years you make payments is considered a drawback to recasting for many people. There’s also the issue of whether
it’s a good use of your money to put a large lump sum toward your mortgage. If, for example, you have a 3% or 4% mortgage rate and also owe higher-interest debt, it’s smarter to use any lump-sum money to pay off that debt first rather than your mortgage. Likewise, you could very well get
a better return on your money by investing in stocks instead of paying off your mortgage. “Over the years, I have advised
several clients about mortgage recasting, and from a ‘generating wealth’ standpoint, it has always made more sense to invest a large sum of money in the stock market,” says Letson. “However, some clients just want
to pay off their mortgage and be debt-free.”
MAGIC RETIREMENT NUMBER The average American thinks he or she will need $1.26 million to retire, according to a recent Northwestern Mutual survey. That’s down from $1.46 million in last
year’s survey. Unfortunately, 51% think it’s likely they’ll outlast their retirement savings, and 54% don’t think they’ll be financially prepared come retirement. The reality is that the amount you’ll
need varies on when and where you retire, and how much income you’ll be getting from Social Security, pensions, and potential work performed during retirement.
FICO SCORES TUMBLE Credit scoring firm Fair Isaac Corp.
reported that the national average credit score for all consumers fell to 715 in February, dipping one point from the previous month and two from last year. A spokesperson said that the decrease
was due in part to a resumption of reporting for federal student loans since the pandemic reprieves. If you’re struggling to repay student loans, contact your loan servicer immediately to see if you qualify for options like income-driven repayments, deferment, or forbearance.
JOB INSECURITY The probability of losing your job in
the next 12 months increased by 1.6%, to 15.7%, according to the Federal Reserve Bank of New York. That’s the highest probability since March 2024. The increase was most likely for those with annual household incomes below $50,000. If you feel that job loss is a possibility, actively strengthen your job skills, keep building your professional network, create a financial emergency fund, and keep your resume up to date.
THE COST OF SNAIL MAIL If the U.S. Postal Service has its way,
the cost of staying connected the old- fashioned way will rise again this month. Forever stamps are set to increase
from 73 to 78 cents on July 13 once the USPS proposal gets the green light. That’s a 6.8% increase and the 20th
time stamp prices have climbed since 2000. In addition, prices for domestic as well as international postcards and mail will also go up.
JULY 2025 | NEWSMAX MAXLIFE 77
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