Mortgage recasting is a financial strategy used by homeowners with existing mortgages. It involves paying a large sum towards the principal balance of the mortgage, and then having the lender re-amortize the loan. This process leads to lower monthly payments over the remaining term of the mortgage without changing the interest rate or the term of the loan.
Recasting a mortgage can be beneficial for homeowners who have come into a large sum of money, such as an inheritance or a bonus, and want to reduce their monthly financial burden. It's different from refinancing because it doesn't involve a credit check or new loan terms, and usually comes with a lower fee.
Not all loans are eligible for recasting, and it's primarily offered on conventional and conforming loans. It's important to check with the lender if recasting is an option and what fees are associated with it. Additionally, since the term of the loan doesn't change, it's crucial to consider how this aligns with long-term financial goals.