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Both can change a mortgage payment, but they work differently. Availability depends on your existing loan and servicer.
Refinancing involves a new mortgage. It can change the rate or repayment term, and may provide cash out when permitted. Qualification and closing costs apply; compare the complete new offer with your existing loan.
After additional principal has been paid, an eligible recast recalculates the payment over the remaining term. It generally preserves the existing interest rate and remaining loan term. It does not provide cash out or happen automatically after an extra payment.
Ask your current servicer whether the loan permits recasting, what principal payment and fee are required, and how the new payment is calculated. Not every loan is eligible. Consider your cash reserves before committing a lump sum, and request written figures for the alternatives.
By Anthony Piccone · 7th Level Mortgage LLC
General information is useful. A mortgage professional can help you evaluate the facts that apply to you.
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