If you want to lower your monthly mortgage payment and have the means to make additional payments toward your loan principal, a mortgage recast might be a great option for you. Learn what a recast involves, how it can help you save now and long term, eligibility requirements, and the process from start to finish.
A recast involves making one or more voluntary payments to reduce your loan principal by $10,000 or more and reamortize your unpaid balance over the remainder of your loan term. In other words, your monthly principal and interest payment will be recalculated based on your reduced loan balance and payoff date.
The immediate result of a recast is a reduction in your monthly mortgage payment. Long term, a recast can reduce the amount you pay in interest over the life of your loan.
While a recast will change your monthly payment, it will not change your interest rate. If your goal is to reduce the interest rate of your loan, reach out to your Loan Officer about refinancing or call us. We’ll be happy to help.
No, not all loan types are eligible. Under the current government rules, recast is not an option for USDA (RHS), VA and FHA loans.
To qualify for a recast, the following must apply:
Here’s a rundown of the process and what to expect: