Mortgage recast
What you need to know
Understanding how recast works
Whether you added a little to your monthly mortgage payment or paid a large one-time lump sum, your required monthly payment amount has still stayed the same. Since you’ve paid extra principal payments, you may have the option to lower your monthly payment instead of paying off early. This option is known as a recast. A recast takes your remaining balance and spreads it over the remaining term of your loan, which will reduce your monthly payment.
How it works:
You closed on a 30-year, $200,000 mortgage at a 4% interest rate. Your required monthly principal and interest payment = $954.
Answers to your most common questions
No, you will not be required to submit any documentation other than signing the recast agreement.
No, completing a recast on your loan will not require a credit check. However, your loan must be in good standing.
When you begin making the new, lower payment after the recast, this will result in paying less principal each month. This means you will pay more interest over time than if you made a principal reduction and continued making the higher payment. (Note: you may pay amounts above the new lower payment to pay down principal faster.)
This only affects the principal and interest portion of your monthly payment, which will remain at the lower amount following the recast. The escrow portion of your payment could change in the future, which would affect your overall monthly payment.
Yes. You can continue to pay additional principal payments at any time and pay your loan off early with no penalties or fees.
Yes, if you pay down the principal balance ahead of schedule, you will be eligible to recast your loan again.
No, there is no minimum amount required. However, a recast after a small principal reduction will not significantly lower your payment.
You can recast most conventional loans. However, FHA, VA, and USDA loans can't be recast. The availability of recast is based on investor guidelines and can change without notice.
You would need to check with your new servicer.
See if your account qualifies for a recast
Call 1-800-848-9136 to discuss your options.