Deciding which mortgage company to handle your financing can often be a tedious process requiring hours of time, comparing various rates, fees, terms, experience and quality of the person that you’re working with. Here is one additional factor to consider…
You ought to select the lender whose terms are all woven into the fabric of your financial life both short-term and long-term and a low rate providing mortgage might support that, however it may not. Here’s why: to secure the lowest possible interest rate you’re going to have to invest upfront overhead in the form of discount points to purchase the interest rate. You’ll want to make sure that when you do, you recoup your money relatively quickly (two-three years) otherwise you’re chasing over dollars to get dimes. Another factor that you should consider when determining what mortgage company, you should go with, is if they really have your best long-term interests in mind. Truth is most banks and lenders don’t. They want the interest you pay to them over time. One such feature of barometer for a quality lender is a recast mortgage.
Most banks and lenders will originate your mortgage and then as soon as your loan is originated, they sell your mortgage immediately in the secondary market.
This means that your servicing of your loan i.e. where you’re making your mortgage payments continually changes until that loan is refinanced or paid off making it problematic for you to having to keep changing who you’re making a mortgage payment to. Any payments you make will also never lower the payment.
The recast mortgage does not work like that. Recast lenders will service your loan without selling it and you can lower your payments without refinancing. A recast is when your servicer of your mortgage allows you to make a principal balance contribution to your current principal and will “recast” meaning change your payment reflective of that principal balance pay down.
This is extremely beneficial to you as it will allow you to lower your payment without having to go through the arduous process of refinancing again. It allows you to have your cake and eat it too. So, a factor when determining what mortgage company to work with would be a company that handles your loan from start to finish and keeps your loan on the books and does not sell off the servicing as well as offering low rates.
Such a mortgage company that offers these benefits truly is offering an exemplary level of service, far surpassing 90 percent of most banks and lenders in the marketplace.
Looking for a recast mortgage? Start now.
Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at www.sonomacountymortgages.com.