We just bought a home & moved across the US.  Our first mortgage payment is due on November 1st.  Our home in California sold before we left, but with all the new regulations, the new owners weren't able to close on the house before we closed on our East Coast home.  The California house closed 2 days ago and now we're trying to decide if we should recast the 30 year loan or refinance it down to a 15 year loan.  We owe around $500K on the new house, but we'll have about $300K to pay down the loan.  Recasting is much, much cheaper, but it sounds like I'd have to keep my 30 year loan.  Would there be a penalty if we keep the 30 yr loan and pay it off early?  Any help would be greatly appreciated.

What does recast mean to you?  To me it means you pre-pay a chunk and effectively reduce your loan term/interest although your  monthly payment does not change (normally)-

Refinance that loan into a 20 or 15 year fixed if your are going to put a serious chunk of change towards it.

As far as if there is a pre-payment penalty: Beats me.  I don't have a copy of your Note or any Riders.(There's a clue in there!!!)

Thank you for your reply.  The lawyer who was at the signing of our East Coast home said that if we put this chunk down on the house it would lower our monthly payment.  I don't think recasting the loan would allow us the chance to get a lower interest rate - but he said it would lower our monthly.  Lowering our monthly is important to me - so if recasting the loan would not do that, we will definitely refinance. 

depending on the type of loan you have, as it appears you may have a "Jumbo" loan and what your rate is, and how long you plan on living there, it may be more advantageous for you to refi......if you request a recast with the lower payments your lender should be willing to assist you as you will have a much lower loan to value, also make sure you talk to your accountant for any "capital gain" issues.

I just did a recast. They take your existing interest rate and recalculate the payment with the new balance owed for the amount of years/months left on the original loan. It cost me only $250.00 with BOA. MUCH cheaper then closing costs!!! It definetly lowers your payment. As far as paying your house off sooner you can always pay extra on you principal with your monthly payments. Just a thought!?

Judy

details, details, details...

We all need details of your current loan as to whether it's more beneficial for a refinance or a recast...

1st question to ask yourself - is a lower rate or a lower payment more important (and/or is a 15 yr or 20 yr payment comfortable for you???).