Mortgage Recast: A Smart Way to Lower Your Payment After You Sell
Picture this: your agent wants your current house spotless and staged so you can snag a top-dollar offer. Perfect—except you need those sale proceeds for a big down payment on your next place before the first one closes. A mortgage recast can bridge that gap and lower your payment after you sell.
Welcome to the classic two-house juggling act.
What Is a Mortgage Recast?
A mortgage recast (sometimes called re-amortization) lets you apply a large, one-time principal payment after closing and then ask the lender to recalculate your payment schedule based on the lower balance. Your interest rate and loan term stay exactly the same, but your monthly payment drops.
How a Mortgage Recast Works
- Close on your new home with the minimum required down payment.
- Sell your existing home.
- Apply the sale proceeds to your new loan as a lump-sum principal payment.
- Request a recast from your loan servicer (a modest fee may apply).
- Enjoy a reduced monthly payment without replacing your existing loan or taking on extra closing costs.
Before You Recast: Qualifying if You Buy Before You Sell
- You must qualify to carry both homes for a period—your current mortgage and your new mortgage—until the first property sells. Underwriting counts principal, interest, taxes, insurance, and applicable HOA dues.
- Once eligible per servicer policies (often after one or two payments), you can apply a lump-sum principal payment from your sale proceeds and request a mortgage recast (a modest fee may apply).
- There is no borrower early‑payoff penalty at BankSouth Mortgage. You may pay down principal or refinance at any time; a recast is simply one convenient way to reduce the monthly payment after funds arrive.
Frequently Asked Questions
| Question | Answer |
| How does a mortgage recast work at BankSouth Mortgage? | We accept a one‑time principal payment (within policy limits), charge a small recast fee, and send you a new amortization schedule with a lower monthly payment—no credit re‑check required. |
| Will my interest rate change? | No. A mortgage recast keeps your existing rate and original term. |
| Can a mortgage recast remove PMI? | Yes—if your lump‑sum payment brings your loan‑to‑value below 80 % and you meet standard PMI‑removal guidelines. |
| How soon after closing can I request a mortgage recast? | Many conventional lenders, including BankSouth Mortgage, require at least one or two payments first. Confirm exact timing with your loan servicer. |
| Are FHA, VA, or USDA loans eligible for mortgage recasting? | Government‑backed loans do not allow recasting. Check with your lender about alternative payment‑reduction options. |
| What does a mortgage recast cost? | Expect a modest servicing fee (often under $300). Ask your servicer for the current amount. |
| How is a mortgage recast different from simply paying extra on principal? | Extra payments lower your balance but do not change your required monthly payment. A recast formally recalculates (re‑amortizes) the payment schedule, giving you a smaller monthly obligation. |
Is a Mortgage Recast Right for You?
Taking the next step is simple. Reach out today to see how a mortgage recast can help you move forward with confidence.
Leave a Reply
Want to join the discussion?Feel free to contribute!