Meet lender requirements: These can vary by lender, but one common requirement is to have a history of on-time payments. Have enough loan equity: Your lender might ask that you have a certain amount of equity in your home to qualify. Meet minimum principal reduction requirements: You will likely need to have paid a certain amount toward your loan’s principal amount before your lender approves you for a recast mortgage.

These include:ĭo not have a government-backed loan: You cannot have an FHA loan, USDA loan or VA loan. You’ll need to meet certain qualifications to be eligible to recast your mortgage. In that case, a loan recast might be preferable to a refinance because it allows you to keep your current rate. You can’t get a lower interest rate or a shorter loan term with recasting, but if your interest rate is already low - or at least lower than prevailing rates - then much of the advantage of refinancing is gone. Recasting a mortgage: Recasting allows you to keep your existing loan, but you adjust the amortization. Borrowers typically refinance to get a lower interest rate, go from an adjustable-rate mortgage to a fixed-rate mortgage or do a cash-out refinance of some of the equity in their home.

The new loan pays off your existing loan, giving you a new mortgage with a new interest rate. Refinancing a mortgage: Refinancing requires that you apply for a brand-new mortgage and pay its closing costs. There’s a big difference between recasting a mortgage and refinancing one, even though both can help you save money. A loan officer can help you run the numbers and understand the best strategy for your situation.Īmount spent with recasting after 10 yearsīalance left with recasting after 10 years If you still have questions about your potential savings, consult with your mortgage lender. You can estimate your new monthly payment after the recast with the help of Bankrate’s amortization schedule calculator. If a mortgage recast is the right move for your finances, make sure the math checks out. This means it’ll calculate new monthly payments, including principal and interest, and map them out on a repayment schedule. Once you’ve eliminated a portion of your balance with that lump sum, your lender will reamortize mortgage terms. (If your lender doesn’t require a minimum reduction, know that only putting up a small amount won’t be enough to justify the recast.) Some lenders might require you to pay a certain amount, as well as a fee of several hundred dollars. To recast your loan, you’ll need to make a lump-sum payment. Your new payoff schedule matches what it would have been originally but with each monthly payment adjusted to reflect the new balance. Recasting your mortgage doesn’t mean you’ll pay off your mortgage early. Most, if not all, lenders require you to be in good standing with payments. Your lender might require you to reduce your balance by a minimum amount in order to recast it. You can’t typically recast an FHA loan, USDA loan or VA loan - although your lender might use the recasting method to modify your loan if you’re struggling to pay.

Not all types of mortgages qualify for recasting in the standard sense. Although your loan has been recast, you’ll retain the same interest rate and loan term. Your lender will then reamortize the loan with the smaller balance and new, lower monthly payments. To recast your loan, you’ll simply make a lump-sum payment toward the balance. Most homebuyers are familiar with a refinance, but what is a recast mortgage? Mortgage recasting is a form of prepaying your mortgage. Recasting might be simpler and cheaper than refinancing, depending on how much you pay in the lump sum. When you recast your mortgage, you’ll keep the same interest rate and term. A recast mortgage allows you to pay a lump sum toward your mortgage in order to reduce your remaining monthly payments and interest.

Recast mortgage payment calculator