How a mortgage recast works
When you recast, you pay a one-time lump sum toward your principal and your servicer re-amortizes the remaining balance over the same number of months left on your loan. Your interest rate and term are untouched, so the only thing that changes is a lower required monthly payment. It is a low-cost way to reduce your payment without refinancing.
Recasting is ideal if you have come into a windfall — a bonus, inheritance, or proceeds from selling another property — and want lower monthly cash flow while still keeping your existing low rate. This calculator shows both the new payment and the interest you save over the life of the remaining loan.
Recast vs. refinance vs. extra payments
All three put extra money toward your home, but they do very different things. A recast lowers your monthly payment while keeping the same rate, term, and payoff date. A refinance replaces the loan entirely, which can change your rate and term but requires a full application and closing costs. Making extra payments without a recast keeps your payment the same but shortens the term and gets you debt-free sooner. Recasting is the right tool when your priority is lower required monthly cash flow rather than an earlier payoff.
Pros and cons of recasting
Benefits
- Keeps your existing — often lower — interest rate.
- Small flat fee instead of full refinance closing costs.
- No credit check, appraisal, or new underwriting.
- Permanently lower required monthly payment.
Trade-offs
- Requires a sizeable lump sum that is then locked in equity.
- Does not shorten your loan or change the payoff date.
- Not available on FHA, VA, USDA, and some other loan types.
- Saves less interest than putting the same lump sum toward an earlier payoff.
Tips before you recast
- Confirm eligibility and the fee. Ask your servicer whether your loan can be recast, the minimum lump sum, and the exact cost before committing.
- Keep an emergency fund. A lump sum into your mortgage is hard to get back — don’t drain the savings you may need.
- Consider keeping the old payment. If your goal is to be debt-free sooner, you can recast for flexibility but continue paying the original amount to pay off faster.