Recasting a mortgage

Q What does it mean to recast a mortgage?

— C.F., Horace, North Dakota

A Recasting, also called reamortizing, can be handy if you suddenly have a large lump sum you'd like to pay toward your mortgage. It involves your lender recalculating and lowering your monthly payments due to the smaller loan balance. Recasting generally doesn't cost too much, and it will save you in overall interest paid, but it doesn't change your interest rate or the terms of the loan.

Depending on the circumstances, you might also consider refinancing your loan — having your loan paid off with a new loan. This does cost more, but it might get you a lower interest rate, a shorter term and/or lower monthly payments. It can also save you a lot in interest.

You might also just apply your lump sum against your current balance, and do nothing else. Doing so will get your loan paid off sooner.

Q Are growth stocks or value stocks better? — H.T., Waverly, Nebraska

A Neither is necessarily better, but certain kinds of investors might favor one or the other. Younger or more risk-tolerant investors with long time horizons might want growth stocks — shares of companies whose revenue and/or earnings are increasing at a relatively rapid rate; these could (but might not) grow phenomenally over many years. More riskaverse investors might prefer value stocks, which seem undervalued and thus present lower risk.

Note, though, that the terms aren't mutually exclusive. Ideally, you could find and invest in rapidly growing stocks with market values significantly below what they seem to be worth. That scenario offers the best of both worlds.