Buying Before You Sell? A Mortgage Recast Might Be Your Best Friend
You’re finally ready to upsize (or downsize) and list your current home. Your agent wants it empty and beautifully staged to attract top-dollar offers.
Sounds great… but there’s a twist, right?
Catch-22, anyone? You’re planning to use the proceeds from your current home as a large down payment on your new home—but now you have to close on the new home before the old one sells.
The Solution: Mortgage Recast
A mortgage recast can help bridge that gap. Once your current home sells, you apply the equity as a lump-sum payment toward your new mortgage and ask your lender to re-amortize/ recast the loan. Here’s what that means for you:
- You close on your new home with the minimum down
- Sell your current home afterward
- Apply the sale proceeds to reduce your principal
- Enjoy a lower monthly payment—without the hassle or cost of refinancing
For BankSouth Clients – A Special Note on EPO:
If you are planning to pay off the loan in full, BankSouth has an Early Payoff (EPO) policy requiring six scheduled payments before you can fully pay off your loan. But here’s how to work within those rules:
After your first mortgage payment, you can:
- Make a lump-sum payment of up to 29% of the original loan amount
- Request a recast from your servicer
Result: A lower monthly payment—without triggering the EPO
After six full payments: You can choose to pay off the entire remaining balance penalty-free—or simply enjoy a lower monthly payment based on your reduced principal.
Recasting FAQ (Quick & Simple)
- Does the interest rate change? Nope—it stays the same.
- Can it remove PMI? It can, if your loan-to-value ratio drops below 80%.
- How is it different from just paying down principal? Paying extra doesn’t change your payment amount—recasting does.
- Is there a fee? Yes, usually a modest fee. Ask your loan servicer for details.
- How’s it different from refinancing?
- Refinance = new loan, new rate, new costs
- Recast = same loan, lower payment
- When can I recast? It varies—some lenders require a few payments first. Check with your servicer.
- Can I recast an FHA, VA, or USDA loan? Unfortunately, no—government-backed loans aren’t eligible.
Is Recasting Right for You?
If you’re juggling two homes—or you’ve received a lump sum (like a bonus or inheritance) and want to lower your mortgage payment—recasting could be a smart, simple solution.
Let’s run the numbers together and see if it makes sense for your situation. I’m always here to help you make smart, low-stress financial decisions.
The BankSouth Mortgage Advantage:
Experience the speed of ReadyApprove from BankSouth Mortgage, where you can secure conditional approval for conforming loan limits within hours.
With ReadyLoan®, you can make this process even easier. Our digital platform lets you apply, track your loan progress, and submit documents securely—all from your computer or mobile device. You’ll be armed with the confidence to quickly submit an offer, and the seller will see you as a serious, prepared buyer.
Have peace of mind with our FREE one-time rate float-down* and no lender fee refinance options!
When you purchase your home with me at BankSouth Mortgage, you may be able to refinance later with no lender fees.** This program offers flexibility as life changes, with the potential for savings when it matters most.
* One-time float down available on 45-120 day rate locks. Float down must be executed at least 15 days prior to closing and must be at least .125 improvement. ** This offer may change or end at any time without notice. “No Lender Fees” refers to waived origination charges. Eligibility conditions apply. Subject to credit and property approval.
Blog post date: Thursday, July 3, 2025
