‘Tis the season to be thankful and I‘m starting with you r/personalfinance

[miaooor]

@flowerbud They are not required to do it, nor is it required to be free. In general they have guidelines, which you should be able to ask them for in advance. Most of the time it's there to prevent min/max people from ruining it for everyone by asking them to recast it every time they put an extra dollar of principle on there. I believe most banks peg a minimum at 10%.

As with everything mortgage related, they're going to check that you are in fact up to date on your payments, a quick automated calculation that your house is still worth what they think it is, and how nice they're feeling that day. In general it works out to their advantage due to the increased interest revenue from you.

If they don't agree to it you can always appeal, they are human. Otherwise refinancing is an option, though it will cost ~$1500-2500. It's a MUCH easier process than buying a house as there is no ticking timer.

 

[flowerbud]

@miaooor I agree, I can just pay down the additional amount now, apply for a recast and in case they don't agree, just refinance the lower principal now to lower the monthly payment.

Given the fact that I am talking about a 40% down payment towards the principal, they better agree else I refinance. Would I be wrong to take such a stance? If they don't recast, they stand a chance to lose out on all interest.

I got an appraisal for the house and it is definitely worth more than it was when I got the mortgage.

 

[aniska]

@flowerbud Keep.in mind that you typically pay a charge to re-fi. Once you find out that cost, you may find it is easier just to pay what you are and pay the house off earlier.

 

[miaooor]

@flowerbud They don't care about your specific interest. If they decline the re-cast, ask for it to be escalated, ask why it was declined to see if you can work with them, etc. If they still decline I wouldn't say "or else I'm going to re-fi." They will just transfer you to someone to sell you a mortgage which is more profitable for them. Otherwise, they get a paid-in-full loan success story on their books, plus the fee(s) for giving you "payoff statements."

Nothing they do on this front is worth getting your blood pressure up over. They certainly won't break a sweat. They have various goals and targets which are completely opaque to you, and potentially even the person assessing your loan for recast.

 

[flowerbud]

@miaooor not boiling blood over but it would be pretty stupid of Chase to let go of the interest from a good standing account just because they would not want to recast as someone was not in the right mood?

 

[edavisunc]

@ovis90 Yep. This sub is one of the best things on Reddit. This kind of stuff should be a normal part of our education.

 

[lami]

@ovis90 I understand that contagious feeling you had after making large payments to your loans! I used to think having money in my savings account was better than paying off my unsubsidized loans until I realized how much interest was accumulating. I ended up using my savings to make huge payments on my loans and it felt amazing.

From then on I saved (even on my poor grad student salary) and put all of it into paying off my loans. I started with about 15k and the day my balance hit zero felt awesome even though my savings was practically gone. I still have my subsidized loans to pay off, but at least those aren’t accumulating interest right now and I can start saving with out guilt!

Anyway, nice to hear your story! Congrats!