What's a Mortgage Recast?

If you've recently come into a large sum of money,you may be considering paying off or paying down your outstanding loans, including your mortgage. When you pay down a substantial amount of your loan you may benefit from what many mortgage lenders call a loan recast. This is when your lender recalculates your monthly payments based on your outstanding balance and remaining term, lowering your monthly payments over the life of the loan. While a recast doesn't require a new appraisal, a fairly large lump sum is required. In addition, not all mortgages allow them.

Additional points to consider are:

Do you want a shorter loan term?

A recast doesn't allow this; instead, it lowers your monthly payments. If you want to pay off your mortgage ahead of schedule, you may be better off refinancing to a shorter loan term or making additional payments towards your loan's principal.