Recasting Your Mortgage

Recasting your mortgage, in case you have not heard this term before, is another tool for homeowners to use to perhaps lower their monthly mortgage payment. In this particular scenario, you’ll get to keep your interest rate. And that’s just one thing that makes it different than refinancing your mortgage.

If you’ve come into a larger lump sum of cash ($5,000–$20,000) and are looking for more peace of mind on monthly expenses, recasting your mortgage is an option to consider. Recasting will lower your monthly payment for the life of your mortgage, keeping your interest rate and your pay-off date intact. You’ll need to have a conventional loan, not a FHA or other government- back mortgage, to take advantage of this option.

Start by contacting your lender and asking about recasting. Typically, lenders will charge a flat processing fee of up to $500 for this service. Once your recasting application is approved, you’ll pay the big lump sum and this processing fee to your lender. Then, they’ll recalculate your new mortgage payments over the remaining life of the loan.

Don’t think about recasting if you’re using your emergency fund as the lump sum, as that is a more important use for that money. But recasts are a good idea when you want to have lower monthly payments and keep a current desirable interest rate. They are also helpful when you are buying a new home and selling an old home at the same time.

Understanding your mortgage options can help you make smarter decisions about your monthly finances. Wynne Moore Group can help you explore your home financing options and connect you with trusted professionals who can guide you through the process. Take the next step toward making your homeownership goals work for you.