When you refinance a mortgage, your loan is actually closed, then reopened as a new loan with new terms (length of loan and/or interest rate). Refinancing also comes with a bunch of steps, including a home appraisal and related fees. As a result, a refinance also takes time to finish (typically 30 to 45 days).
A recast, in contrast, is much simpler: Your loan life, terms, and interest rate remain as is; the only thing that changes is you get to make lower monthly payments.
“Recasting your mortgage is a great option if you want to lower your monthly payments and have the funds to make a lump sum payment to your lender,” says Randall Yates, founder and CEO of The Lenders Network.
“Mortgage recasting is a much simpler process than refinancing,” says Yates. “There is no income verification or credit check needed. The entire recasting process can be completed in less than 30 days.”
A recast is also different from merely sending in a lump sum to prepay your mortgage early. In those cases, your monthly payments remain the same. You will just finish off paying your mortgage earlier.