Why agents care
Recasting completes a buy-before-you-sell plan: take a larger loan on the new home, then recast when the old home's proceeds arrive. It's a strong planning tool for move-up clients.
Glossary term
Mortgage recast
A mortgage recast happens when a borrower makes a large principal payment and the lender recalculates the monthly payment over the remaining term at the same interest rate. There's no new loan, so costs are usually limited to a modest fee. Not all loan types allow it.
Example
Example: paying $150,000 toward a $600,000 balance at 6.5% with 29 years left lowers the principal and interest payment by roughly $970 a month after a recast.
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Questions by topic
Mortgage recast: common questions
Do all lenders allow recasts?
No. Many conventional loans do, but government-backed loans often don't. Borrowers should check with their servicer.
Is recasting better than refinancing?
It depends on rates. A recast keeps the current rate. A refinance replaces it.
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