Mortgage recasting ...when to do

[Gene Jung]

Hi,

Assume there is no cost for mortgage requesting for my lender. Assume my marginal income tax bracket is very high, and mortgage rate is 5.25%. If I have lump-sum free cash, should I just apply it to my mortgage to recast so that my monthly goes lower? Or should I just put them into stock market? If mortgage rate were < 3.5%, then there is no need for recasting...but 5.25 seems like a border line. To beat 5.25% mortgage rate....the corresponding, offsetting stock market return would be at least double that...

[Chris Seveney]

Quote from @Gene Jung:

Hi,

Assume there is no cost for mortgage requesting for my lender. Assume my marginal income tax bracket is very high, and mortgage rate is 5.25%. If I have lump-sum free cash, should I just apply it to my mortgage to recast so that my monthly goes lower? Or should I just put them into stock market? If mortgage rate were < 3.5%, then there is no need for recasting...but 5.25 seems like a border line. To beat 5.25% mortgage rate....the corresponding, offsetting stock market return would be at least double that...

 I agree. The only caveat I will throw into this is liquidity. What is the price of liquidity for you? If you do not have liquidity keeping money liquid in stocks has value, whereas if you do not need the liquidity then yes recasting the mortgage may not be a bad idea.