Talking Downpayments and Interest Rate – Answering Your Questions

Can You Recast a Jumbo Loan?

A jumbo loan is a type of mortgage loan that exceeds the limits set by the Federal National Mortgage Association (FNMA) or the Federal Home Loan Mortgage Corporation (FHLMC). The loan limits vary by county and are higher than those of regular mortgage loans, which can make them more difficult to qualify for and more expensive to pay off. Many jumbo loan borrowers are looking for ways to reduce their payments, and one of them is recasting.

Recasting is a process that allows borrowers to modify their loan terms without having to refinance. The borrower pays a lump sum payment to reduce their principal balance and the loan is then re-amortized. This means that the payments are recalculated based on the new principal balance and the remaining loan term. This can result in lower monthly payments for borrowers.

In order to qualify for a loan recast, the borrower must meet certain criteria. The lender will usually require the borrower to have at least 20% equity in the home, have a good payment history, and make a lump sum payment of at least 5% of the loan balance. The borrower must also have a good credit score, as lenders will look at this when deciding whether or not to approve the recast.

In addition to lower monthly payments, there are several other advantages to recasting a jumbo loan. One is that it can help borrowers avoid the higher interest rates associated with refinancing. Additionally, it can help borrowers avoid the closing costs associated with refinancing, which can be quite expensive. Finally, recasting can help borrowers get out of a jumbo loan more quickly, as the lower payments can result in the loan being paid off sooner.

Key Points:
• A jumbo loan is a type of mortgage loan that exceeds the limits set by the Federal National Mortgage Association (FNMA) or the Federal Home Loan Mortgage Corporation (FHLMC).
• Recasting is a process that allows borrowers to modify their loan terms without having to refinance.
• To qualify for a loan recast, the borrower must have at least 20% equity in the home, have a good payment history, and make a lump sum payment of at least 5% of the loan balance.
• Recasting a jumbo loan can help borrowers avoid the higher interest rates associated with refinancing and the closing costs associated with refinancing.
• Recasting can also help borrowers get out of a jumbo loan more quickly, as the lower payments can result in the loan being paid off sooner.

People Also Ask:
Q: How does loan recasting work?
A: Loan recasting is a process that allows borrowers to modify their loan terms without having to refinance. The borrower pays a lump sum payment to reduce their principal balance and the loan is then re-amortized. This means that the payments are recalculated based on the new principal balance and the remaining loan term.

Q: What are the benefits of recasting a jumbo loan?
A: The benefits of recasting a jumbo loan include lower monthly payments, avoiding the higher interest rates associated with refinancing, avoiding the closing costs associated with refinancing, and getting out of a jumbo loan more quickly.

Q: What are the requirements for loan recasting?
A: The requirements for loan recasting include having at least 20% equity in the home, having a good payment history, making a lump sum payment of at least 5% of the loan balance, and having a good credit score.

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