A recast mortgage can offer several potential advantages for Boston homeowners, including the ability to lower monthly payments. By understanding how recasting works and its benefits, homeowners can make informed decisions about their mortgage options.

Recasting a mortgage involves making a large lump sum payment towards the principal balance of the loan, followed by a recalculation of the remaining loan balance and a subsequent adjustment of the monthly payment amount. Here's how it can help lower monthly payments:

1. Reduced loan balance: When a homeowner makes a significant lump sum payment towards the principal balance, it reduces the overall amount owed on the loan. With a lower loan balance, the interest charges on the remaining balance decrease, resulting in a lower monthly payment.
2. Extended loan term: In some cases, recasting a mortgage may also extend the loan term. For example, if a homeowner has been paying their mortgage for several years and then recasts the loan, the remaining balance can be spread out over a new, longer term. By extending the loan term, the monthly payments can be reduced.
3. Improved cash flow: Lowering monthly mortgage payments through recasting can free up additional cash flow for homeowners. This extra money can be used for other financial goals, such as paying off high-interest debt, making home improvements, or saving for retirement.

It's important to note that recasting a mortgage typically requires a lump sum payment, which can come from various sources, such as an inheritance, bonus, or the sale of an asset. Homeowners should also consider any potential fees associated with recasting, as some lenders may charge a fee for this service.

References:

• Bankrate: Recast Mortgage: What It Is and How It Works
• NerdWallet: What Is a Mortgage Recast and Why Do It?