Have You Ever Heard of Recasting?

Have You Ever Heard of Recasting?

Here’s a little secret that could help you save big.

Given the ongoing health crisis and our tight housing market, we have a lot of clients who are ready to make a move but don’t want people tromping through their homes while they’re still living there. For these folks who would prefer to move out first, we have a solution: recasting.

In the past, there used to be something called a bridge loan, which allowed you to move into a new home and then sell your old one. For the most part, these loans disappeared back in 2007 and 2008. Recasting, however, is still an option, but lenders don’t really want to talk about it because, frankly, it’s not in their best financial interest.

You can refinance and pay roughly $5,000 in associated fees, or you can keep your current rate and terms and buy down your mortgage with a large lump sum. Here’s how this works:

Let’s say you want to move from one house to the next but don’t want people coming in and out, whether you’re concerned about COVID, have too much stuff lying around, or any other reason. Ideally, you want to be able to move first. Recasting allows you to qualify for both mortgages and purchase the new home with a minimal down payment (5% or maybe even 3.5% down). You will, however, have to use conventional financing; this option doesn’t work for FHA or VA loans.

“You’ll keep the low-interest rate and current terms—you don’t have to start over.”

After you move into your new home, we’ll get your other one on the market and sell it. Presumably, you’ll have a lump sum of equity coming from that other sale; recasting allows you to put this sum toward your next mortgage and pay it off.

The good news is that you’ll keep the low-interest rate and current terms—you don’t have to start over. Also, you’ll only be paying a small fee to recast. This option makes the process simpler and a lot less expensive.

So, if you know somebody who’d like to take advantage of this great product, feel free to give me a call. I’m more than happy to explain it in greater detail and field any questions you may have. As always, if you have any other real estate-related questions or needs, don’t hesitate to reach out. I’m here to be a resource for you.

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