August 6, 2020

For the homeowner: mortgage recasting

You want to recast your mortgage if you have an existing mortgage and you are interested in lowering your current monthly payments. This generally requires an extra principal payment of at least $5000 to recast your mortgage. You will need to submit an offer letter to your lender and pay a fee that typically ranges from $100-$300 to recast your loan based on the new lower principal balance. The purpose is to lower your monthly payment. Recasting does not change your interest rate or the duration of your loan. If you currently have a high interest rate you might want to consider refinancing with the current low interest rates instead. Mortgage recasting is better when you already have a low interest rate, you have paid down your mortgage and you are further along in your amortization schedule.

5 simple steps to recast your mortgage:

  1. Contact your lender to request to recast your loan
  2. You will receive a letter from your lender with instructions to follow
  3. follow the instructions from your lender plus mail a lump sum to put towards the principal of your loan of $5000 or more
  4. sign the form provided by your lender
  5. submit the processing fee of $100-$300

*Justin Pitcock shared his own personal story in this video. He initially paid less than 20% down and had PMI (private mortgage insurance) After recasting Justin no longer had PMI and was able to lower his monthly house payment.