Recast Mortgage

No, a mortgage recast typically does not impact your credit score. Because you are not taking out a new loan, there is usually no hard credit pull, and it does not affect your “length of credit history” in the way that opening a brand-new loan account would.

Some lenders allow multiple recasts, while others limit you to one over the life of the loan. You will need to check with your specific lender regarding their policies on subsequent reamortizations.

No. This is a primary feature of a recast. If you locked in a low interest rate years ago, a recast allows you to keep that favorable rate while benefiting from lower monthly payments. Refinancing, by contrast, would force you to take on the market’s current interest rate.

You can find many online mortgage recast calculators. To do it manually, you need your remaining balance, remaining term in months, and your current interest rate. Subtract your lump-sum payment from your balance and use a standard amortization formula to calculate the new monthly payment required to hit zero at your original maturity date.

Yes, most lenders charge an administrative fee to process a recast. These fees are usually quite modest, typically ranging from $150 to $500, which is significantly cheaper than the thousands of dollars in closing costs required for a full refinance.

This is the most common dilemma.

• Choose a Recast if: You already have a great interest rate and just want to lower your monthly payment to improve cash flow.

• Choose a Refinance if: You want to secure a lower interest rate, shorten your loan term (e.g., from 30 years to 15), or access cash through a “cash-out” refinance.

While requirements vary, they are generally less stringent than refinancing. Common criteria include:

• Good Standing: You must be current on all payments.

• Lump-Sum Minimum: Lenders typically require a minimum principal reduction (often $5,000 to $10,000).

• Loan Eligibility: Many conventional loans qualify, but government-backed loans (FHA, VA, USDA) often do not.

This depends entirely on your specific mortgage servicer. Some lenders allow a recast as soon as 30 to 60 days after the loan closes, while others may require you to have held the mortgage for at least six months. Always check your original loan agreement or contact your servicer directly.

Once you pay a lump sum toward your principal, the lender essentially “resets” your amortization schedule. Because your debt is lower, the lender spreads that remaining balance over the original number of years left on your loan. This results in a smaller monthly principal-and-interest payment.

A mortgage recast, or reamortization, occurs when you make a significant one-time lump-sum payment toward your mortgage principal. The lender then recalculates your remaining monthly payments based on that new, lower balance. Your interest rate and the original end date of your loan remain exactly the same.