What is a mortgage recast?

Mortgage recasting is a good idea if you have extra funds to make a lump sum payment and reduce your monthly mortgage bill. 

With mortgage recasting, your original loan term or interest rate doesn’t change. You’ll only pay a lower monthly amount after the lump sum payment. You’ll save on interest payments as well.

Even if your lender doesn’t offer recasting, You can still make the lump sum payment. Your monthly payments won’t reduce, nor will your interest rate, but you’ll be able to pay off the loan sooner. You can recast conventional loans, high-balance loans, and jumbo mortgages. 

It may not always be a good idea to recast your loan even if you have extra funds at your disposal. For instance, check if you may need the money for other debts or expenses. Often, you may qualify for lower mortgage interest rates if you’ve built a good credit score. Refinancing is a better option in such a case. Refinancing may be a better option if the overall mortgage rates are lower than when you first took out the loan.