Recasting vs. Refinancing: A Lesser-Known Way to Lower Your Payment
Mortgage recasting is a lesser-known option for lowering a monthly payment that doesn't involve replacing the loan the way a refinance does. It's a narrower tool than refinancing, but for the right situation, it can be a simpler and cheaper way to reduce a payment. What recasting actually does Recasting involves making a large lump-sum payment toward the loan's principal, after which the lender re-amortizes the remaining balance over the original remaining term at the existing interest rate. The result is a lower monthly payment, without changing the interest rate, the loan term, or requiring a new underwriting process. How recasting differs from refinancing Refinancing replaces the loan entirely — new rate, potentially new term, full underwriting, appraisal, and closing costs comparable to a new mortgage. Recasting keeps the original loan and its existing rate exactly as is, simply reducing the balance and re-spreading the existing term's remaining payments — w...