A mortgage recast, also called re-amortization, lets you make a large lump-sum payment toward principal and have the lender recalculate your monthly payment based on the lower balance, same interest rate, and remaining term.
Unlike refinancing, recasting does not require a new loan, credit check, or appraisal. You keep your existing rate and term but pay less each month going forward.
How recasting works
You send a lump-sum payment, often $5,000 minimum, though requirements vary by lender, and request a recast. The lender applies the payment to principal and spreads the reduced balance over the remaining months of your loan.
Your interest rate and loan term stay the same. Only the monthly principal-and-interest payment drops. Total interest paid over the life of the loan decreases because the balance is smaller.
Example: a $400,000 balance at 6.5% with 25 years remaining has a payment of about $2,703. A $50,000 recast payment drops the balance to $350,000 and the payment to about $2,365, saving $338 per month.
Recast vs. refinance
Refinancing replaces your loan entirely, new rate, new term, new closing costs ($3,000–$6,000+). Recasting keeps your current loan and costs a small administrative fee ($150–$500 typically).
Recast makes sense when your rate is already low and you do not want to give it up. Refinance makes sense when rates have dropped enough to justify new closing costs.
Recasting lowers payments but does not shorten the loan unless you continue paying the old amount as extra principal. Refinancing to a shorter term does shorten the loan but raises monthly payments.
When recasting makes sense
You received a windfall, bonus, inheritance, or home sale proceeds, and want lower monthly payments without losing a great interest rate.
You bought a new home before selling your old one and want to apply sale proceeds to reduce the new mortgage payment after closing.
You want payment relief without the hassle and cost of a full refinance. Recasting is faster and simpler.
Limitations to know
Not all loans are eligible. FHA and VA loans often cannot be recast. Most conventional loans can, but check with your servicer.
Recasting does not remove PMI early. You still need 20% equity through payments or appreciation for PMI to drop off.
Money used for a recast is locked in home equity. If you might need that cash soon, keeping it liquid in savings or investments may be wiser.
Calculate your recast savings
Enter your current balance, rate, remaining term, and lump-sum payment to see your new monthly payment and total interest savings.
Compare against the refinance calculator if rates have changed, and the mortgage payoff calculator if you would rather shorten the loan than lower payments.