What is a recast modification? and what is it used for? A bridge loan alternative.

A recast is used by borrowers that can apply at least 10% towards the principal balance of their mortgage. The lender usually charges a small fee ( $250) to recalculate the borrowers mortgage payment on the reduced principal balance without having to change the locked rate or reset the amortization.

• A borrower may use this if there may have been some inheritance or large earnings and they would like to reduce their current mortgage payment.

• A borrower may apply this if they used 100% financing to purchase a new home prior to selling their old home. Upon the sale of the old home, they would apply the sale proceeds to lower the mortgage on their new home.