Typically, when you make a large principal payment on your loan, the monthly payment remains the same, but the term of the loan shortens.
However, if you wish to lower the monthly payment instead of shortening the term, ask the lender if they allow a recast.
A recast is where a large principal payment is made on the loan, and the lender re-amortizes the loan based on the lower loan amount over the remaining period of the loan, thereby lowering the monthly payment.
Some servicers offer a recast, and some do not. If they do, they typically charge a fee to process this request. If the servicer does not offer a recast, and you want to lower your monthly payment, contact us and we can take a look at whether a refinance makes sense.
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Counsel Mortgage Group®, LLC
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John Rapasky is the President of the Counsel Mortgage Group, LLC. Copyright © 2017 Counsel Mortgage Group®, LLC