Reply to Mortgage recast vs extra payments

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[quote=Anonymous][quote=Anonymous]it is in the "mortgage company's" interest to re-cast. [b]a recast accelerates paydown.[/b] you give them principal today to lower your payment. if one didn't recast, then that principal would be due later than today. You are giving the bank principal that they can  take and invest at higher rates. if you don't give them the principal via a recast payment, then they continue to earn the mortgage's rate (which is well below market). Every bank / MBS holder out there wants everyone to prepay (make extra payments, recast paydowns, etc). [/quote]

I think you're confusing prepayment with recasting.

The question is whether a mortgage lender has an interest in letting you recast *after* you prepaid an amount on your mortgage.  Almost all mortgages today have no prepayment penalty, so you can prepay without needing the lender's permission. You do need their permission if after prepaying you want to recast.

Now what might be a good strategy would be to approach the lender and offer some prepayment in exchange for recasting. Then it would be a win-win, but still since the lender is obliged to let you prepay, and not obliged to let you recast, they may still take your prepayment without letting you recast.[/quote]

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