Mortgage fraud and identity theft risks

A cash-out refinance is a type of mortgage refinancing where you replace your existing home loan with a new, larger one. You then receive the difference between the two loan amounts in a lump sum of cash, which you can use for virtually any purpose.

Recasting: You make a large lump-sum payment toward the principal, and the lender re-amortizes your loan based on the new, lower balance. Your interest rate and term stay the same, but your monthly payment is reduced. There is usually a small fee.
Refinancing: You replace your existing mortgage with a completely new loan, often to secure a lower interest rate or change the loan term. This involves closing costs and a full credit check.

The amount you save depends on your loan amount, interest rate, and the size and frequency of your extra payments. For example, on a 30-year, $300,000 loan at 4% interest, an extra $100 per month could save you over $27,000 in interest and allow you to pay off the loan nearly 5 years early.

An escrow surplus occurs when there is more money in the account than is needed to cover the projected bills. If the surplus is over a certain threshold (usually $50), the lender is required by law to send you a refund check. If the surplus is smaller, the amount may be credited back to your escrow account, potentially lowering your future monthly payments.