Recast your investment mortgage

Are you aware that you may be able to recast your investment property mortgage?

A mortgage recast is when you make a lump-sum payment toward the principal balance of your loan. Your lender will then re-amortize your mortgage with the new (lower) balance. The idea is that you can lower your monthly payments since your principal went down, but your interest rate and term remain the same.

Example:

$250,000 original mortgage

$215,000 balance remains

PITI $1,625

Rent $1,995

Cash flow $370

Say there is $50,000 to put toward the principle

New balance after recast is $165,000

PITI goes to $1,169

Cash flow goes to $826

Cash flow improvement is $456/mo, annual $5,472

The $50,000 used to recast the mortgage earns 10.94%!