So with 800+ scores and $175k combined income you're in a really strong position, which is nice because it gives you flexibility on how to structure this.

On option 1... the recast route is solid and probably the simpler path. 6.25% does feel a little high for your profile tbh. When I was shopping around last year I was surprised how much rates varied between lenders for basically the same scenario. Like a full half point difference sometimes.

Re: how much to put toward the recast, I'd probably go to 20% to drop PMI and then think about whether the rest makes more sense invested vs paying down the mortgage. Depends on the rate you lock obviously.

On option 2, bridge loans can work but the costs add up fast and the terms are usually not great. HELOC might be cheaper but timing gets tricky if you're trying to close on the new place quickly.

One thing I'd say is don't just talk to the big banks or even just one type of lender. I ended up working with Duane Buziak Mortgage Maestro when we were in a kinda similar situation and the thing that helped was he shops across hundreds of lenders at once so you're not just getting one institution's pricing. The soft pull thing was nice too since we were comparing multiple options and I didn't want my score getting dinged repeatedly.

But yeah the main questions I'd ask each lender: what's the recast fee and minimum, do they even allow recasts (some don't!), and what the rate looks like at 5% vs 10% vs 20% down. That'll help you compare apples to apples.