Lowering Your ACA Costs with Mortgage Recasting

For some, paying off their mortgage quickly is an attractive financial move. However, it can also mean sacrificing the ability to qualify for ACA subsidies, which can save thousands of dollars annually on health insurance premiums.

To strike a balance between these two objectives, consider recasting your mortgage. By paying down a significant portion of your principal and asking the lender to recalculate your monthly payments, you can lower your expenses while maintaining the same interest rate and loan term.

Key Considerations
> – Recasting typically requires a substantial lump sum payment, such as $10,000 or more.
> – The lender may charge a fee for recasting, which can vary.
> – Recasting does not affect your credit score, unlike a refinance.
> – Not all lenders offer recasting, so it’s essential to inquire with your current lender.

How Recasting Lowers Income for ACA Subsidies
The ACA determines eligibility for subsidies based on household income. By lowering your mortgage payments, your yearly income decreases, potentially qualifying you for financial assistance on your health insurance premiums.

Example
Suppose your current mortgage payment is $1,600 per month. By recasting and reducing your monthly payment to $1,000, you effectively lower your annual income by $7,200 ($1,600 x 12 – $1,000 x 12). This could bring you within the income range to qualify for ACA subsidies, which could save you hundreds or even thousands of dollars per year.

Benefits of Recasting
> – Lower monthly mortgage payments
> – Potential eligibility for ACA subsidies
> – No impact on credit score
> – Flexible option, allowing you to continue paying down your mortgage aggressively after recasting

Conclusion
Recasting a mortgage can be a valuable strategy for those looking to balance financial goals while maintaining health insurance coverage. By reducing your monthly expenses and potentially qualifying for ACA subsidies, you can enjoy both financial freedom and peace of mind. It’s essential to remember that recasting may not be suitable for everyone and should be explored with your lender to determine eligibility and potential benefits.