Mortgage recasting is a strategy that helps borrowers reduce monthly mortgage payments without going through the refinancing process. By making a one-time lump-sum payment toward the principal balance, the lender recalculates your monthly payments based on the lower balance, making your mortgage more manageable. Here’s how it works and what to consider.
Key Features of Mortgage Recasting
Lower Monthly Payments
By reducing the loan balance, the recalculated payments become smaller, helping make your mortgage more affordable.
No Change in Interest Rate or Term
Unlike refinancing, your interest rate and loan term remain the same. This means you avoid paying closing costs or undergoing the refinancing process.
Minimal Fees
Most lenders charge a small fee (typically $250–$500) for recasting, making it a cost-effective alternative to refinancing.
Eligibility Requirements
Mortgage recasting is generally available only for conventional loans and is not typically offered for government-backed loans like FHA or VA mortgages.
Benefits of Mortgage Recasting
Lower Monthly Budget Impact
Recasting reduces your monthly financial obligations, freeing up cash flow for other expenses or savings.
No Need to Requalify
Since it’s not a refinance, you don’t need to meet credit or income requirements again.
Save on Interest Costs
A reduced principal balance lowers the total interest paid over the life of the loan.
Who Should Consider Mortgage Recasting?
Mortgage recasting is ideal for borrowers who come into a significant sum of money—such as from a bonus, inheritance, or property sale—and want to lower their monthly payments without refinancing.
Final Thoughts
If you’re considering mortgage recasting, reach out to your lender to determine if your loan qualifies and to discuss the details. This simple yet effective strategy could help you save money and reduce financial stress over the life of your mortgage.
Ellen Wilson
703-864-3773
[email protected]
NMLS #591525
Licensed Mortgage Professional
Fidelity Direct Mortgage
8133 Leesburg Pike Suite 700
Vienna, VA 22182
