Recasting works sort of like refinancing .. but your rate doesn't change and neither does your mortgage term.
Instead, a lump sum that you provide is deducted directly from your principal. Your monthly payment is then recalculated based on that reduced principal amount.
The financial institutions usually impose limits (minimum lump-sum amount, how many times per year you can do it, etc.) And they don't advertise it or make it easy, because there's no money in it for them.
And since the principal/interest ratio is front-loaded (so that much of the money that they make from you is in the first seven years or so of a 30-year loan), then if you can recast early in the life of the loan, the benefit is increased. (And that's the real reason why the industry advises upgrading every seven years - that 30-year, front-loaded clock gets reset in their favor.)
https://www.bankrate.com/finance/mortgages/what-is-mortgage-...
Recasting works sort of like refinancing .. but your rate doesn't change and neither does your mortgage term.
Instead, a lump sum that you provide is deducted directly from your principal. Your monthly payment is then recalculated based on that reduced principal amount.
The financial institutions usually impose limits (minimum lump-sum amount, how many times per year you can do it, etc.) And they don't advertise it or make it easy, because there's no money in it for them.
And since the principal/interest ratio is front-loaded (so that much of the money that they make from you is in the first seven years or so of a 30-year loan), then if you can recast early in the life of the loan, the benefit is increased. (And that's the real reason why the industry advises upgrading every seven years - that 30-year, front-loaded clock gets reset in their favor.)