"Should I refinance or recast my mortgage?" I receive this question all the time. Today I'm explaining the difference between refinancing and recasting, and which option is best for you. 

Let's say you get a nice windfall, either from a relative passing or something else. If you are two years into a 30-year fixed-rate mortgage, should you refinance or recast? If interest rates were lower than they were when you purchased, it might make more sense to refinance since your new loan will have that lower rate. 

“When you recast, your interest rate doesn't change.”

However, interest rates are high right now. In our current environment, it probably makes more sense to recast your mortgage. When you recast your mortgage, you pay a lump sum towards the total amount of your loan to lower your principal and monthly payment. However, unlike when you refinance, your interest rate and terms remain the same. 

Your lender doesn't have to approve your recast, but I've never personally seen a lender deny one. Just know that you need permission from your lender first, so reach out to them before making the final decision. 

If you have questions about today's topic or anything else, please call or email me. I look forward to hearing from you!