 TITLE: How to Recast Your Mortgage CONTENT: How Does a Mortgage Recast Work?\n--------------------------------\nWhen you recast your mortgage, you pay a lump sum toward the principal you owe on your home loan. Your mortgage lender then calculates a new monthly payment based on the reduced balance. The term and interest rate of the loan stay the same.\nRecasting a mortgage does come with an out-of-pocket cost, in the form of an administrative fee, but it's typically only a few hundred dollars.\nA key difference between a mortgage recast and a mortgage refinance is a recast isn't a new loan. You don't have to go through an application process, and the lender won't check your credit or order an appraisal of your home. Both processes involve fees, though they're typically lower for recasting than they are for refinancing. Even with cheaper fees, however, the process of recasting tends to be much more expensive than refinancing thanks to the required lump-sum payment. The best choice for you depends on your needs and preferences.\nHere's an example of how a recast might work.\nLet's say you bought your home in May 2016. You currently owe $250,000, with a monthly principal and interest payment of $1,600. The interest rate for your 30-year conventional mortgage is 5%.\nNow, let's say you inherited $100,000 from your Aunt Betty, and you decide to put $50,000 of that toward a mortgage recast. While you'll still have a 30-year loan with a 5% interest rate, the recast will drop your monthly payment from $1,600 to $1,179. That's a savings of $421 a month. END