How much equity do I need to refinance in California?

For a rate-and-term refinance, most conventional lenders require at least 5% equity (95% max LTV). For a cash-out refinance, the standard cap is 80% LTV (20% equity required). FHA and VA refinance programs have different equity requirements — FHA Streamline requires no appraisal and minimal equity, and VA IRRRL similarly has no equity minimum.

Can I refinance with a lower credit score than I had when I bought?

Yes, as long as you still meet the minimum requirements for the loan program. FHA Streamline refinances do not require a new credit check in some cases. VA IRRRL refinances also have relaxed documentation requirements. Conventional refinances do use current credit for pricing, so a lower score may increase the rate.

How soon after buying can I refinance?

For conventional loans, there is typically no waiting period for a rate-and-term refinance, though most lenders require 6 months of payment history. FHA Streamline requires 6 months of on-time payments after the original closing and at least 210 days from the original closing date. VA IRRRL requires 7 months of payments.

What is the break-even point on a refinance?

Break-even is your closing costs divided by your monthly savings. If you pay $5,000 in closing costs and save $200/month, break-even is 25 months. If you plan to stay in the home longer than the break-even, the refinance saves money. Most refinances in the current Bakersfield market have break-even periods of 18–36 months.

Can I do a cash-out refinance on an investment property?

Yes. Investment property cash-out refinances are available up to 75% LTV on single-family properties and 70% LTV on 2–4 unit properties. Rates are higher than primary residence refinances, and credit and reserve requirements are stricter. Dan handles investment property cash-out refinances regularly.

What Is Mortgage Recasting? (When It Makes Sense and When It Doesn't)

Most homeowners know about refinancing. Far fewer know about recasting. It's an underused tool that can lower your monthly mortgage payment without the cost, hassle, or rate risk of a refinance, and for borrowers who have a good rate and come into a lump sum of cash, it can be the better option.

What Recasting Is

Mortgage recasting, also called reamortization, works like this: you make a large lump sum payment to reduce your principal balance, and then your lender recalculates your monthly payment based on the new, lower balance over the remaining loan term at your existing interest rate. The result is a lower monthly payment at the same rate and without taking out a new loan. There are no new closing costs, no credit check, no appraisal, no underwriting.

How Recasting Differs from Refinancing

Refinancing replaces your entire loan with a new one, typically to get a lower rate, change the term, or access equity. It involves full underwriting, an appraisal, closing costs of 2–3% of the loan amount, and potentially a higher or lower rate. Recasting changes only the monthly payment calculation, your rate stays the same, your term stays the same, your lender stays the same. The only cost is a small administrative fee the servicer charges, typically $150–$500.

How Recasting Differs from Making Extra Principal Payments

This is the most common confusion. If you make extra principal payments on your mortgage, say, an extra $500 per month, you pay down the balance faster and save significant interest, but your required monthly payment doesn't change. You've built equity but your payment is the same minimum amount. Recasting changes the required payment. After a recast, you now have a lower required minimum payment each month, which improves your cash flow going forward.

Who Offers Recasting

Not all mortgage servicers offer recasting, and not all loan types qualify. Most conventional conforming loans are eligible. FHA, VA, and USDA loans generally do not allow recasting under standard program guidelines. And even for conventional loans, your specific servicer must offer the option, some do, some don't. Before you plan around a recast, verify with your servicer that it's available for your loan.

Minimum Lump Sum Requirements

Most servicers require a minimum lump sum payment to process a recast, commonly $10,000 to $50,000. The requirement exists because the payment change isn't meaningful enough to process below a certain threshold. This is a practical consideration if you're coming into a smaller sum; it may not clear the minimum.

A Real Example

You have a 30-year mortgage with 25 years remaining at 6.5%. Your current balance is $300,000 and your current payment is $1,896. You receive a $60,000 inheritance. You put it toward the mortgage principal, bringing the balance to $240,000. Your servicer reamortizes that $240,000 over the remaining 25 years at your existing 6.5% rate. Your new payment: approximately $1,617. That's $279 per month in cash flow freed up at zero additional interest rate risk.

When Recast Beats Refinance

Recasting wins when you already have a good interest rate and don't need, or can't get, a meaningfully lower rate by refinancing. If you bought in 2021 at 3.0% and come into a lump sum, refinancing would replace that 3.0% rate with today's higher rate. Recasting preserves your 3.0% rate while lowering your payment. That's a trade-off that heavily favors recasting in the current rate environment.

When Refinancing Beats Recasting

Refinancing wins when the available rate is materially lower than your current rate and you'll stay in the home long enough to recoup the closing costs. If your current rate is 7.5% and refinancing into a 6.5% rate saves $200/month with a $6,000 cost, you break even in 30 months. If you plan to stay 10 years, that's a strong case for refinancing, not recasting.

Common Mistake

Confusing extra principal payments with recasting. Many homeowners make extra payments every month hoping to lower their required payment. Extra payments don't lower your required payment, they accelerate your payoff. If your goal is lower cash flow obligations each month, you need a recast, not extra payments.

Bottom Line

Mortgage recasting is a low-cost, low-complexity way to reduce your monthly payment without touching your rate. It's best for borrowers with a good existing rate who come into a meaningful lump sum. If your servicer allows it and your loan type qualifies, it's worth exploring before assuming you need to refinance.