You save 38k but you forego earnings on 500k and you have lower interest deduction. I am not sure how this makes sense. Your mortgage interest rate after tax is what you have to exceed to justify not putting more principal in your house. Putting more principal in rarely makes sense
The question is who usually will be able to secure a mortgage rate at 6.5% for a 1M loan while already having another mortgage? Banks are not easing financial conditions at the moment so genuine curious how much you should have as net worth (including 401k, IRAs, brokerage account) to be able to make such a deal.
Thanks for sharing your knowledge, the article is great and provides a great example of a best practice when contemplating options on mortgage loans! Nevertheless it would be nice to have some extra context, thanks for the reply anyway!
I just reread the article. I had never heard of the recast mortgage until I first read this article. After more research, my wife and I made an offer on a new home with a 50% down payment. We are both 63 and married 2 years ago. We brought two homes to the marriage, but we wanted our own place. So we contacted a lender about a recast mortgage and they said yes (after three monthly payments). We placed my wife’s home on the market and had 2 offers within 3 days. We will place my home on the market either in December or late spring. My home is twice the value of my wife’s home and will be a harder sell. However, once sold, we will take the gains, recast the mortgage, and refill our cash bucket. So thank you for the timely advice. I have shared this information with numerous friends and family members.
And...if current house doesn't sell in 90 days, wow-$10k+ to carry two mortgage payments and $120k cash poorer in meantime. Must have massive wealth to pull that one off.
Wish I could take advantage of more. The one thing I have tried to impress upon my children - own your own business. If not work a job with a solid pension and a solid side gig
You save 38k but you forego earnings on 500k and you have lower interest deduction. I am not sure how this makes sense. Your mortgage interest rate after tax is what you have to exceed to justify not putting more principal in your house. Putting more principal in rarely makes sense
Appreciate the pushback, Eli. And you’re right, purely on paper, investing that $500K might out-earn the interest saved.
But this person isn’t optimizing for a spreadsheets.
They’re optimizing for peace of mind: lower payments now, full payoff by 50, and flexibility with cash flow.
They’ve already got growth covered elsewhere. This move was about control, not returns.
The question is who usually will be able to secure a mortgage rate at 6.5% for a 1M loan while already having another mortgage? Banks are not easing financial conditions at the moment so genuine curious how much you should have as net worth (including 401k, IRAs, brokerage account) to be able to make such a deal.
Great question, Amelia. And fair point.
This was an actual example we just worked on. The numbers penciled out easily for that client—they do very well for themselves.
But the concept applies at smaller scales too. It just depends on income, timing, and cash flow.
Thanks for sharing your knowledge, the article is great and provides a great example of a best practice when contemplating options on mortgage loans! Nevertheless it would be nice to have some extra context, thanks for the reply anyway!
I just reread the article. I had never heard of the recast mortgage until I first read this article. After more research, my wife and I made an offer on a new home with a 50% down payment. We are both 63 and married 2 years ago. We brought two homes to the marriage, but we wanted our own place. So we contacted a lender about a recast mortgage and they said yes (after three monthly payments). We placed my wife’s home on the market and had 2 offers within 3 days. We will place my home on the market either in December or late spring. My home is twice the value of my wife’s home and will be a harder sell. However, once sold, we will take the gains, recast the mortgage, and refill our cash bucket. So thank you for the timely advice. I have shared this information with numerous friends and family members.
Thanks for sharing the story, Dom. Glad this newsletter helped you out!
And...if current house doesn't sell in 90 days, wow-$10k+ to carry two mortgage payments and $120k cash poorer in meantime. Must have massive wealth to pull that one off.
Totally fair, Lucy. That’s the biggest real risk here.
If the home doesn’t sell quickly, carrying two mortgages can get expensive fast.
In this case, the market was moving fast, so the risk window was small—but it’s absolutely something to factor in.
Great content. Not sure enough of the public has the ability to run through that scenario no matter what the price points are at
Thank you, Una. And totally fair point.
The persons situation was ideal—quick-moving market, solid income, and liquidity. That combo made it easy to execute.
The broader takeaway isn’t “everyone can do this,” it’s “know the tool exists when the timing does make sense.”
💯
Wish I could take advantage of more. The one thing I have tried to impress upon my children - own your own business. If not work a job with a solid pension and a solid side gig
Never heard of a mortgage recast. Valuable information. Thank you.
Of course. Glad you learned something new.