Want To Cut Your Mortgage Payment? Here’s A Little-Known Strategy That May Be Worth Looking Into

A recent article in The New York Times lays out a little-known strategy that can cut your mortgage payment.

The strategy, called "recasting" or "re-amortization" involves paying off a lump sum of the principal amount and then asking your lender to reset the monthly payments using the original interest rate and loan terms. The lump sum payment reduces the principal amount so your monthly payments would decrease somewhat, reducing the interest paid over the life of the loan.

Not all lenders or servicers will allow you to do this, but it may be worth making a phone call and looking into it. If they do permit recasting there may be a administrative fee for this service. However you're not required to pay closing costs or submit to a credit check because you are not asking for a new loan.

Recasting may be a viable option for homeowners (borrowers) that are unable to qualify for refinancing because of the ever-tightening credit guidelines, are self-employed or have less-than-stellar credit.

So if you're scratching your head and trying to figure out to do with that year-end bonus ... maybe recasting your mortgage is a smart move.