Key takeaways
- A recast re-amortizes your balance after a lump-sum principal payment — same rate, same payoff date, lower payment.
- It costs a small fee (often $150–$500), far less than refinancing.
- Best when you already like your rate and have a lump sum to apply.
- FHA, VA, and USDA loans generally can't be recast.
What is a mortgage recast?
A mortgage recast is a lump-sum principal payment after which the lender re-amortizes the remaining balance over the same term at the same rate. Your interest rate and payoff date don't change — only your monthly payment falls.
Worked example
Using the defaults — a $320,000 balance at 6.5% with 28 years left, plus a $50,000 lump sum:
- New balance: $320,000 − $50,000 = $270,000
- Current payment ≈ $2,070 → new payment ≈ $1,747
- Monthly savings ≈ $324
- Interest saved over the remaining term ≈ $58,700
Same rate, same payoff date — just a lower payment and far less interest, for a small recast fee.
Recast vs. refinance vs. extra payments
| Option | Keeps your rate? | Lowers payment? | Cost |
|---|---|---|---|
| Recast | Yes | Yes | Small fee + lump sum |
| Refinance | No (new rate) | Maybe | Closing costs |
| Extra payments | Yes | No (shortens term) | None |
Recast availability, minimums, and fees vary by servicer, and government-backed loans usually don't qualify. See the CFPB for mortgage basics, and confirm with your servicer.
Frequently asked questions
What is a mortgage recast?
A lump-sum principal payment after which the lender re-amortizes the remaining balance over the same term. Same rate, same payoff date, lower payment.
Is recasting better than refinancing?
If you already have a good rate, usually yes — it keeps the rate and costs a small fee instead of full closing costs. Refinance wins mainly when you can drop the rate meaningfully.
Does it save on interest?
Yes — the lump sum cuts principal immediately, so you pay interest on a smaller balance for the rest of the loan.
How much does a recast cost?
Usually a small flat fee (often $150–$500), plus the lump sum and a lender minimum (frequently $5,000–$10,000).
Will every lender recast?
Most conventional loans allow it; FHA, VA, and USDA generally do not. Check your servicer for minimums and fees.
Does it change my payoff date?
No — the term stays the same; only the payment drops. To shorten the term, make extra payments without recasting.