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What does “re-amortizing” a loan mean?

by IgnacioDiaz267 from Plano, Texas. Feb 17th 2017 Reply

William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,727 contributions

Re-Amortizing a loan is also called re-casting.. When you sign up for a mortgage, then you have a set schedule of payments.. Assuming you have a fixed rate mortgage, your principal and interest payments remain the same throughout the term of your loan.. Now lets say you get a windfall of cash and you decide to make a large, one time principal payment of $50,000. By making this payment, it will not effect your monthly payment.. it will remain the same.. but you will have chopped off several years off the overall term because of the large principal reduction payment of $50,000. However, some lenders allow you to "Re-Cast" (re-amortize) your loan where your term will remain the same, but they lower your monthly payment because of the large principal reduction payment.. understand that not all lenders allow for this so if this is something you are looking to do, then be sure your lender allows for it.. . I'm a preferred Lender with Arizona and California being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 NMLS# 226347 / RPM Mortgage NMLS 1541014 / AZMB0121893

Feb 17th 2017
Larry Gray (lgray_312_247)
#595 ranked lender in California - 1,139 contributions

Fannie mae or Freddie mac allows re-amortizing but not for FHA or VA loans. As William Acres points out, you do need to ask your lender if they allow for it, but if you have a conventional fannie mae or freddie mac owned loan you ought to be able to have the opportunity to re-amortize the loan. You can find more on this at

Feb 17th 2017
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