Buy Now. Lower Your Payment Later.

What a Mortgage Recast Is

A recast (sometimes called a re-amortization) is a lump-sum principal payment followed by a recalculation of your monthly payment over the remaining term. Your interest rate does not change. Your loan term does not change. Your lender simply re-runs the math on a smaller balance, and the payment falls.

That is the whole trick. It sounds small until you compare it to the alternative most people reach for, which is a refinance: a new application, a new appraisal, new income documentation, a new credit pull, closing costs, and whatever the rate happens to be that month. A recast skips all of it.

Why It Matters More for Physicians

Physician income is lumpy in a way underwriting does not reward. You may be buying on a resident salary or a first-year attending contract, with money on the horizon that cannot be counted at closing:

• A signing or retention bonus that pays out after you start
• A partnership buy-in that converts to distributions in year two or three
• Stock or deferred compensation with a vesting date
• The equity in the house you have not sold yet because you had to move first
• A spouse's income that starts after the relocation

A physician loan solves the getting in problem: low down payment, no monthly mortgage insurance up to program limits, student loans treated sensibly. A recast solves the what happens next problem. Together they let you buy the house your career is headed toward, on the timeline your career actually runs on.

How It Works, Step by Step

Recast vs. Refinance vs. Just Paying Extra

The honest summary: if your rate is good and your goal is a lower monthly payment, a recast beats a refinance almost every time. If your goal is to be debt-free sooner, extra principal payments without a recast do that. If rates have fallen a lot since you closed, a refinance may be worth its costs. Sean will tell you which one, with the math, not a pitch.

What to Watch Out For

Eligibility applies. Whether a specific loan can be recast, when, and for how much depends on the program and the investor behind it. The right time to find out is on your first call, before you pick the program.

A Worked Example, With No Rate in It

A fellow accepts an attending position with a signing bonus payable ninety days after start. She buys before she starts, using a physician program and the down payment she has. Six payments in, the bonus has cleared and the old condo has sold. She sends the combined proceeds to principal and requests a recast. Her rate is untouched, her maturity date is untouched, and her monthly payment drops in proportion to the principal she paid down. She never filled out a second application. That is the entire strategy.

Frequently Asked Questions