Mortgage Recast

A mortgage recast is a refinancing of your mortgage that does not change the interest rate or term of your loan. Instead, a recast simply changes the payment amount and/or the length of time (amortization period) over which you repay your loan.

Recasting your mortgage can be a good way to save money on your monthly payments, especially if interest rates have fallen since you took out your original loan. However, it's important to understand the pros and cons of a mortgage recast before you decide if it's right for you.

Pros of a mortgage recast

• Can lower your monthly payments. If interest rates have fallen since you took out your original loan, a recast can help you lower your monthly payments. This is because a recast will extend the length of your loan, which will lower your monthly principal and interest payment.
• Can shorten the length of your loan. If you're willing to make higher monthly payments, a recast can also shorten the length of your loan. This is because a recast will increase your monthly principal and interest payment, which will go towards paying down your loan balance more quickly.
• Can be a good way to consolidate debt. If you have other debts with higher interest rates than your mortgage, a recast can be a good way to consolidate those debts into one lower-interest loan. This can save you money on interest payments in the long run.

Cons of a mortgage recast

• May not be worth it if interest rates have not fallen. If interest rates have not fallen since you took out your original loan, a recast may not be worth it. This is because you will not save any money on your monthly payments, and you may even end up paying more in interest over the life of your loan.
• Can increase your closing costs. A mortgage recast typically involves paying closing costs, which can range from 1% to 3% of the loan amount. If you're only going to save a small amount of money on your monthly payments, the closing costs may not be worth it.
• May not be available to all borrowers. Not all lenders offer mortgage recasts, and some lenders may only offer them to borrowers with good credit scores and a history of making on-time payments.

Before you decide if a mortgage recast is right for you, it's important to weigh the pros and cons carefully. If you're not sure whether a recast is a good option for you, talk to your lender or a financial advisor.