Recasting Mortgage: How It Works, Benefits & Alternatives

Struggling with high mortgage payments but don’t want to refinance? Recasting your mortgage could be the perfect solution. Recasting allows homeowners to reduce their monthly payments by making a lump-sum payment toward their mortgage principal, recalculating the balance without needing a new loan. Here's a quick breakdown of how it works and when to consider it.

At Sell2Rent, we help homeowners find flexible solutions like sale-leasebacks if recasting doesn’t fit your needs. But first, let's explore the benefits of recasting your mortgage.

What is Recasting a Mortgage?

Recasting a mortgage is a process where you make a large lump-sum payment toward your mortgage principal, and your lender recalculates your monthly payment based on the new loan balance. The best part? Your interest rate and loan term stay the same, and you avoid the complexity and costs of refinancing.

How Does Recasting a Mortgage Work?

1. Make a Lump-Sum Payment: Pay a significant portion of your mortgage principal, usually a minimum of $10,000, depending on your lender.
   
   
2. Request a Recast: After the payment, ask your lender to recalculate your mortgage payment based on the new balance.
   
   
3. Lower Monthly Payments: Your lender recalculates your monthly payments, and you’ll see a lower payment moving forward, but your interest rate and loan term remain unchanged.
   
   

Why Should You Consider Recasting Your Mortgage?

1. Lower Monthly Payments

Recasting helps you lower your payments without the need to refinance. If you’ve received a windfall (tax refund, inheritance, etc.), this is a simple way to reduce payments without changing your loan terms.

2. No Closing Costs or Credit Checks

Unlike refinancing, recasting doesn’t require a credit check or any closing costs. This makes it an affordable option for homeowners who want immediate relief.

3. Keep Your Current Rate

If you have a low interest rate, recasting lets you keep it while lowering your monthly payments, unlike refinancing, which might bring a higher rate.

Pros & Cons of Recasting a Mortgage

Pros:

• Lower payment without refinancing.
  
  
• No credit check or closing costs.
  
  
• Fast process with minimal paperwork.
  
  
• Keep your interest rate the same.
  
  

Cons:

• You need a lump sum payment, which may not be feasible for everyone.
  
  
• Doesn’t provide cash access like refinancing or a sale-leaseback.
  
  
• Not available for FHA/VA/USDA loans.
  
  

Recasting vs. Refinancing: Which Is Better?

Recasting is typically faster and cheaper than refinancing, especially if you’re happy with your current rate and only need relief on your monthly payments.

Learn more: Compare current refinance rates

What Other Options Are There?

If recasting doesn’t seem like the right fit, other options include:

Refinancing

Refinancing could lower your rate or change your loan terms, but it comes with fees and a credit check. If rates are lower than your current loan, this might be a good option.

Sale-Leaseback

If you need cash now and want to stay in your home, a sale-leaseback could be a better option. With this solution, you sell your home to an investor and lease it back, unlocking equity without moving. Sell2Rent specializes in this solution, allowing you to remain in your home while accessing needed funds. Learn more about a sale-leaseback here: https://www.sell2rent.com/how-it-works

When to Choose Recasting vs. Sale-Leaseback?

• Choose recasting if you have extra cash and just want to lower your payments without refinancing.
  
  
• Consider a sale-leaseback if you need cash now but want to stay in your home. This option gives you access to your home equity without having to move.
  
  

Considering a sale-leaseback? Talk to one of our advisors today

How Sell2Rent Can Help

At Sell2Rent, we offer flexible solutions for homeowners in need of financial relief. If you’re facing difficulties with mortgage payments, we can guide you through the sale-leaseback process, allowing you to sell your home and stay as a renter, freeing up cash while keeping your home.

Tip: If recasting doesn’t reduce your payments enough, a sale-leaseback could be the answer to unlocking your home’s equity while maintaining stability.

Conclusion: Is Recasting the Right Solution?

Recasting is a great way to lower your monthly mortgage payments without the hassle of refinancing, especially if you’ve received a lump sum of money. However, it may not be suitable for everyone, particularly if you need cash from your home’s equity or if your loan isn’t eligible for recasting.

At Sell2Rent, we provide sale-leasebacks, a powerful alternative that lets you access your home’s equity without moving. If you’re unsure which option is best for you, reach out to our team for personalized guidance on your options.