Should I recast my loan?

Say you are awarded a bonus and are able to make a $7,000 lump sum payment on your mortgage. After making the payment, you are interested in reducing your minimum-required monthly payments on your fixed mortgage in order to reflect your reduced principle. How would you go about doing that?

What does it mean to recast a loan? When you recast a loan, you re-amoritize, or change, your loan schedule to reflect a lower principle balance. This reamoritization will change your monthly payments along with the amount of each payment that applies to your loan’s principle and interest.

What are the benefits of recasting your loan? Recasting your loan lowers your monthly obligation. This means, if you choose to continue to pay your greater, original monthly payments, a greater amount will go towards paying off your principle.

How do I recast my loan? If you want to re-amoritize your loan schedule, remember creditors are not required to recast your loan. You will likely be required to make a significnt lump payment, often over $5,000. Of course, always keep in mind, the more responsible you are with your credit, the more gracious creditors often are.

Source: moneyning.com