#Mortgage calculator extra payments free#

Minimum payment - many lenders require a minimum lump sum payment for recasting.

The mortgage term remains the same - the borrower will not be able to pay off his mortgage any time earlier.

If the interest rate is declining, refinancing may save the borrower more money than recasting.

The interest rate doesn't change - the interest rate remains the same for the mortgage.While there are many good reasons for recasting, there are also downsides. Borrowers pay only a few hundred for recast. Low upfront costs - the upfront costs are cheap compared to refinancing.No credit or income check - since recasting does not initiate a new loan as refinancing does, there is no credit or income check.Lower monthly payments - after the mortgage is re-amortized, the monthly payments will be lower from now on.Save money on interest - depending on the size of the lump sum payment and the mortgage size, the borrower could save thousands and thousands of dollars on interest payments throughout the loan.Following are the mortgage recast pros and cons. There are advantages and disadvantages of recasting a mortgage depending on the borrower's situation. The fees should be well worth it if the lump sum is large because a reduced balance could save a borrower thousands in interest payments. Borrowers should talk to their lender and ask for the exact amount they have to pay for recasting. There are also processing fees to recast a mortgage which could cost a few hundred dollars. Lenders usually have a minimum requirement for this payment, it can be anywhere from $5,000 to $10,000. To recast a mortgage, borrowers need to make a one-time lump sum payment. Since interest payment is recalculated every month based on the remaining balance, the lower monthly payment means the borrower would save a lot of money on interest payments throughout the loan. The interest rate and the terms remain the same for the mortgage, but the monthly payments are reduced due to mortgage recasting. Is it worth almost $1,000 more to have it now (furthermore, the retail price in 3 years will probably drop)? That is like going into a store that advertised 'SALE-ADD 20% TO EVERY PURCHASE.A mortgage recast is when a borrower makes a large payment to reduce the principal of the mortgage, and the lender re-amortizes the loan based on the new balance.

If purchased on a credit card with a 12% annual percentage rate (APR) compounded daily, and with minimum monthly payments of $166 paid over three years, it winds up costing over $5,980. Here is an example: a new television flat-screen HDTV model retails for $5,000. If one calculated the true cost of goods bought on credit, one would have second thoughts about making the purchase in the first place. Many impulse purchases are made on credit with little thought given to how the debt will be repaid in the future. One should never use credit to purchase things for which one will not be able to pay in the future. Credit abuse increases the cost of credit to everyone. Goods and services are provided on credit with the expectation that they will be paid for with money in the future. Credit is extended with the faith that borrowers will repay the debt.

While credit is very important to the economy, its abuse is harmful.

#Mortgage calculator extra payments free#

The marketing is so aggressive that consumers may lose sight of the fact that this is not free money and make excessive purchases to the point where they find themselves in financial difficulty. This is why credit card companies aggressively compete to get you to use their credit cards and services. This represents hundreds of billions of dollars in interest earnings to lenders. According to the Federal Reserve, there was more than $2.5 trillion of consumer debt outstanding by late 2009-this is more than double the amount outstanding in 1994. Credit is issued by banks, savings and loans, credit unions, public utilities, and even merchants. Today, credit has become a business in its own right. One should not use credit in place of money when there is little or no likelihood that payment in real money will be made-using credit without the intent or ability to pay is theft. Derived from the Latin word for 'trustworthiness,' credit is based on faith that the borrower will repay the debt with real money. While credit stimulates the economy, it does have to be used judiciously.