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Did you just purchase a new home and now you need to sell your previous home? If so, you’ll want to learn about this opportunity. If you would like to put a large sum of the money (your net proceeds) you make on your sale towards your new home mortgage, you may be able to do so without refinancing. In the past it was recommended that new home buyers get a second lien and then when they sold their old home they could pay off the second lien. With loan recasting, the borrower can put down a large sum towards the principle on their new mortgage and without refinancing, can lower their payment. What’s happening is, the investor is adjusting the payment (or recasting it). This does not change the term or interest rate on the loan, it only changes the interest and principle amounts. Not every investor will allow the loan to be recast.

Notes for doing a loan recast:

1. Some of the investors will allow multiple recasts over the course of a loan,
2. they usually require a fee each time a recast is done (usually about $300)
3. and the amount paid on principal has to be significant (usually at least 10% of the remaining balance).

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