I recast a loan on a rental house. This house was purchased at the peak of the market,. and no way- no how does it cash flow. It's also at a fairly high interest rate (6.25%). But it is strategically located between some other property that we own (it's in the middle), so we swallowed the loss of value and we're keeping it. The original loan was a $333K, 30 year fixed. I had been making small additional principal reduction payments (100 or so), but decided to really tackle this debt in our FI quest. I paid a 50K chunk and asked for recasting. The recasting fee was $250, so not very much in the scheme of things. I'm paying an extra $1000-1200 a month now, and it should be paid off in 5 years.
The benefit to me is that by paying the same amount(the amount of the previous payment) , I am getting the debt paid off, but, on paper, it frees up obligatory cash outflow/debt servicing. So, basically, it keeps me qualified for more loans if I need them to buy another rental. It also gives me some flexibility... I could make a lower payment if I needed to. So if, for instance, I had an unexpected expense, a vacancy, or needed to regroup after buying something else, then I have flexibility to pay less for a month or two, instead of marching towards a quick payoff with my extra $1000 a month payments.
When they recast, the push the loan out to the original date. They don't add time, just re-amortize the current balance out to the original pay off date.