Los Angeles Homeowners – Lower Your Monthly Mortgage Payments

If you are thinking about buying a home in Los Angeles or you are already a Los Angeles homeowner, there is a way for you to lower your monthly mortgage payments without going the refinance route.

Lowering your monthly mortgage payments can be accomplished by recasting or re-amortizing your loan.

What is recasting your loan?

Recasting your loan means paying down your principal with a lump sum which resets your monthly payments, keeping the original terms and rates.

Here is an example from a National Association of Realtors article on the subject:

Here’s one scenario: $230,449 is left on a 30-year fixed rate loan for a $300,000 mortgage taken out at 7.93 percent in 1995. The borrower pays $20,000 toward the principal and asks the lender to reamortize their payments over the remaining 15 years of the loan. The monthly payment then drops by $52, from $2,187 to $2,135 per month. ($100,000 toward the lump sum would save $730 a month.

The good news is that since you are not requesting a new loan there will be no paperwork to fill out, credit checks to endure or closing costs to pay.

Los Angeles home buyers, when you are ready, make sure to ask your lender to recast the loan.  Paying down the principal itself will just result in the same payments over a shorter term.  Recasting the loan will reduce the principal and lower your monthly mortgage payments and interest over the life of the loan.

If you are a recent Los Angeles home buyer, and you are about to receive an influx of money, whether it be an inheritance, tax refund, or other, recasting your mortgage might be a good option.