A mortgage recast is when you make a large payment towards your principal balance and your lender recalculates your monthly payments based on the new balance.
Unlike refinancing, a recast doesn't change your interest rate or loan term. It only lowers your monthly payments by reducing the principal balance.
You might consider a recast if you've come into a large sum of money and want to lower your monthly payments without changing your loan terms.
Many lenders charge a fee for recasting, typically around $250 to $500. Check with your lender for specific costs.
Not necessarily. It's best for homeowners who have a large sum of money to put towards their mortgage and want to lower their monthly payments without changing their loan terms.
This depends on your lender. Some allow recasting once a year, while others may have stricter limitations. Check with your specific lender for their policy.
Generally, a mortgage recast does not directly impact your credit score as it doesn't involve opening a new line of credit or changing your loan terms.
Not all mortgages can be recast. Conventional loans are most commonly eligible for recasting. FHA and VA loans typically cannot be recast. Check with your lender to see if your loan is eligible.
The amount you save depends on how much extra you pay towards your principal. The larger the payment, the more you'll save on monthly payments and overall interest over the life of the loan.