When most homeowners think about lowering their mortgage payment, they immediately think of refinancing. But did you know there’s another option that doesn’t involve changing your loan term or interest rate? It’s called a mortgage recast, and it could be the solution you’re looking for.

What Is a Mortgage Recast?

A mortgage recast is when your lender recalculates your monthly mortgage payment based on a new, lower loan balance after you make a significant lump-sum payment—usually $10,000 or more. Unlike refinancing, your interest rate and loan term stay exactly the same. The only thing that changes is your monthly payment, which decreases because your principal balance is lower.

Benefits of a Mortgage Recast

• Lower Monthly Payment: Your payment is recalculated based on your reduced principal, resulting in a smaller bill each month.
• No Credit Check or Appraisal: Unlike a refinance, most recasts don’t require you to re-qualify for the loan.
• Keep Your Low Interest Rate: If you locked in a great rate when you first purchased, a recast allows you to keep it.
• Lower Costs: Recasts typically involve a small administrative fee, not thousands in closing costs like a refinance.
• Flexible Timing: If you recently came into extra cash—like a bonus, inheritance, or sale of another property—this is a great way to put it to work.

When Is a Recast a Good Idea?

A recast makes sense if:

• You’ve got extra funds to apply toward your loan balance.
• You want to lower your monthly payment without starting the loan process over.
• You plan to stay in your home and are happy with your current rate and term.

Recast vs. Refinance: Which Is Right for You?

While refinancing may be a better option if you’re aiming for a lower interest rate or switching loan types, a recast is ideal when you simply want to reduce your payment without the paperwork and fees of a refinance.

Not all loan types qualify for a recast, so it’s important to talk with a mortgage professional to see what’s possible.

If you’re considering lowering your mortgage payment and wondering whether a recast or refinance is right for you, get in touch with Collette Horton at Liberty Star Mortgage. We’ll help you weigh the pros and cons and find the best solution for your financial goals.