A mortgage recast is a lesser-known option that can lower your monthly payment without refinancing. You make a large lump-sum payment toward your principal, and the lender recalculates your payment over the remaining term.
Why people recast
Recasting keeps your existing interest rate and loan, so there is no new application, no appraisal, and minimal fees. It is attractive when you have a great rate you do not want to give up but you have come into extra cash.
Recast versus refinance
- Recast: keep your rate, lower the payment, small fee, no new loan
- Refinance: get a new rate and term, higher cost, full application
When it makes sense
Recasting shines when you receive a windfall like a bonus, inheritance, or proceeds from selling another property, and your current rate is already competitive.
Not every loan allows recasting, and the rules vary. Ask us whether your loan qualifies before making a large principal payment.