Mortgage Recast
mortgageAlso known as: recast, mortgage recast, loan re-amortization
Updated · Written and reviewed by Konstantin Iakovlev
Detailed explanation
Process: borrower pays a lump sum (typically $5,000+ minimum) toward principal, lender re-amortizes remaining balance over original remaining term. Fee: usually $250-500. Available on most conventional and jumbo loans; NOT typically allowed on FHA, VA, USDA. Useful when you receive a windfall (bonus, inheritance, sale of prior home) and want lower payment without losing your favorable original rate. Versus refinance: keeps existing rate (huge advantage if your rate is 3% in a 7% market), no closing costs, no income re-qualification, no appraisal. Versus extra principal payment alone: extra payment shortens the term but does not reduce the monthly payment — recast does both.
Use these calculators to apply this concept
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Debt-to-Income Ratio (DTI)
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Amortization
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Home Equity Line of Credit (HELOC)
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