15 year mortgage + recast?

Question

Hi All!  My wife and I are in Vancouver, WA and are small time investors of SFRs and two Duplexes, totaling 10 units.  I have decent W2 income and I plan to continue working for at least 5-10 years.  With interest rates so low we have refinanced into several 15 year mortgages with the goal of quickly paying down/off a few properties.  But, like everyone, we are also interested in increasing cash flow and ultimately want X amount of cash flow in 10 years so I can retire.

Last year we recast several of our 30 year mortgages and it was a pretty inexpensive way to increase our monthly cash flow.  My question is if anyone has experience with getting a 15 year mortgage and then recasting some time later (since the mortgage principle is being paid down quickly)?  For the more conservative investor, it seems like you can both pay down mortgages quickly but also increase cash flow along the way!

Thanks!

Chris Seveney · Answer

@Josh Auerbach

Recasting is not often used - which I. Todays interest rate environment it is not a bad idea because it will be challenging to get returns that meet your interest rate you are paying

If your loan is 2-3% I would out the money in an account earning 4-5% compared to paying down a 3% mortgage - but I also get the stress relief of having a low mortgage and lots of equity

Alecia Loveless · Answer

@Josh Auerbach I’ve not recast a mortgage yet but it seems to make sense from many perspectives.

I’ve been paying off extra principal each month but have started thinking it might make more sense to save up that amount and do a recast when it gets large enough to increase cash flow.