How to lower your monthly mortgage payment without refinancing

HOUSTON – Your mortgage is probably one of the biggest bills you pay every month. Most people lock in their interest rate and monthly payment for 15 or 30 years.

But you may be able to lower your monthly payment without increasing the length of your loan by recasting.  Recasting is re-amortization of your mortgage. 

It's different from refinancing because you won't have to pay all those hefty fees or go through another credit check. What you will need is some sort of lump sum payment, like money you money have received from a tax refund or a year-end bonus. 

If your bank agrees to recast your mortgage, it will refigure your monthly payment based and your current principal balance using the same interest rate you already have.

Let's say you have $160,178.87 of principal left on a 30-year fixed-rate loan for $200,000 taken out at 4.5% in 2009. 

You have been paying $1,013.37 a month in principal and interest. If you put in $20,000 toward that principal and ask your lender to recast your payments over the remaining 20 years on the loan, your monthly payment would drop by $126.53 to around $886.84.

In this scenario, recasting your mortgage would save you $10,367.20 over the life of your loan.  
JP Morgan Chase and Wells Fargo offer this option with no charge, while Bank of America charges an extra $250. 

Not every loan qualifies. FHA and VA loans cannot be recast by anyone.

Most banks require you to pay down your principal by at least $5000 before they will recast your mortgage. The more you put down, the lower your monthly payment will be.