[USER]

Has anyone done a mortgage “recast”? This has come up because I’m paying extra towards my principal each month…but not seeing any decrease in monthly payment amount.

I was told it just gets recalculated so that you just owe for less than 30years (it was a fixed conventional loan). But I’m thinking it makes more sense if you are paying down principal, that your subsequent payments should get smaller if the total payment is based off % of your principal, right!?

And apparently recast is the only way to see that number lowered. So should we be getting a mortgage recast every month that we pay into principal?!

Otherwise it feels like we’re getting ripped off somehow….and paying the same off a shrinking principal.

[Raegan]

I JUST had this conversation with my lender. I would request an amortization schedule, instead. A re-cast means you pay to have your mortgage payment per month lowered.

This isn’t super beneficial if you are already paying more than your normal payment.

A recast is typical used for someone on a fixed income (like SS).

That being said, if you review your amortization schedule, you should *technically* see a higher principal payment and lower interest payment, which is where you will see the most impact.

Hope this helps!

[Stephanie]

Recasting is just reamoritizing the loan/payment over the remaining term. It doesn’t save you on interest.

Interest is calculated each month based on the remaining principal balance.

[Nicole]

I never recast as I want to pay off sooner and not lower my payment. My extra towards my mortgage currently says I will have 146 less monthly payments.

From my understanding, to recast a loan you need a large one-time payment usually 5k or more.

The bank then reamortization of the loan over same term resulting in lower payment but not shorter term.

[Lisa]

Extra payments won’t reduce the monthly amount, it just reduces the time until the loan is paid off. If you want to reduce your loan amount you would need to check if your institution does recasting. Not all institutions do.

There is usually a fee as well for recasting. I just looked into it for my bank, it’s $500.

Plus, you need to consider that unless you’re paying a large amount off at once, it won’t make much of a dent on the monthly payment.

For reference, on my loan 40k lump sum payment would reduce the loan by $181 and 80k would reduce the monthly payment by $360.

Given I have a very low interest rate I would only do this for the psychological safety of having a lower mortgage payment, because it makes more sense to put that money in the market form a pure investment standpoint.

[Cecily]

Is your goal to pay it off sooner or lessen your monthly expenses? Besides the cost of the recast, those are the only considerations.

I use an app called Payoff Track see our progress on interest savings and months of payments reduced.

[Valerie]

When you make an extra payment toward principal, the next payment you make will show a larger portion going to principal and less going to interest.

If it’s a 30 yr mtg, your payment will stay the same until it’s paid off, which would be sooner than if you hadn’t made extra payments.

[Tom]

You’re not getting ripped off. Over course of the loan you are paying less interest and will be finished sooner.

[Ben]

When you pay extra, you are basically getting rid of payments starting with the last one. So, it doesnt change how much you pay each month, it does reduce the number of months.

A recast puts you back to the original term, but lowers your payment.

You save money each month, but that comes from putting less to principal.

[Ralph]

We recasted our loan, that is done when you put down a large sum of money. If you did 50K it makes sense, if you put 200, or 500 a month additional it does not.

I think there was a cost associated with the recast so again you don’t want to do that all the time.

Paying more on the principle as stated reduces the total interest paid, not the payment.

[Glen]

We recast a number of years ago after I suddenly paid down 20% of our mortgage and wanted to get out of PMI.

It was simple and I don’t remember it costing us anything.

Lower payments but same low interest rate is awesome.

[Tom]

Generally extra payments reduce the principle amount owed. The monthly payments stay the same throughout the loan.

I suppose it would be a burden to the lender to have to recalculate the payment amount every month.

Your loan will be repaid sooner than the 30 years.

[Szandra]

You have to pay for recasts in many scenarios. Sometimes you get one for free but then there is a charge.

[Betty]

By paying more each month, you will pay off the mortgage sooner, and avoid paying interest for the longer term.

When you recast the loan you typically make a large lump sum payment and then recast to spread the remaining principal out over the original term, so those payments (and the interest) are lower.

Some types of mortgages may not be allowed to be recast.

It’s not done month by month, but after a large lump sum payment.

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