What is a mortgage recast?
A mortgage recast — also called re-amortization — is when you make a large lump-sum payment toward your loan principal and your lender recalculates your monthly payment over the remaining term at the same interest rate. Your payment drops, your rate stays put, and your payoff date doesn’t move. For the full definition and a worked numeric example, see what is a mortgage recast.
What does a mortgage recast cost?
A recast is cheap compared to almost any other way of lowering your payment. Lenders charge a one-time recast fee of $150–$500, with around $250 being common. There are no closing costs, no origination fees, and no points. Contrast that with refinancing, which runs 2–6% of the loan in closing costs — on a $320,000 balance that’s roughly $6,400 to $19,200.
Which loans are eligible?
Most conventional loans backed by Fannie Mae or Freddie Mac can be recast, and many jumbo loans can too — though jumbo policies vary widely by investor. FHA, VA, and USDA loans generally cannot be recast; our FHA, VA & USDA recast guide covers the alternatives for government-backed borrowers. Because servicers set their own rules, check the mortgage lender recast policies for minimums and fees before you plan around a recast.
How much lump sum do you need?
Lenders set a minimum lump sum, commonly between $5,000 and $10,000 — UWM requires $5,000, while some servicers require $10,000. The larger your lump sum relative to the balance, the more your monthly payment falls, since the same remaining term is now spread across a smaller principal.
The mortgage recast process, step by step
Recasting is refreshingly simple — there’s no application, appraisal, or credit pull. The full walkthrough lives on our recasting a mortgage page, but in brief:
- Confirm eligibility. Ask your servicer whether your loan can be recast and what the minimum lump sum and fee are.
- Make the lump-sum payment. Apply the qualifying amount directly to principal.
- Submit the recast request. Complete the servicer’s recast form and pay the one-time fee.
- Receive your new schedule. The servicer re-amortizes the loan and sends your new, lower payment — typically within 30–45 days.
Benefits and drawbacks
The benefits are clear: a lower required monthly payment, your existing low rate preserved, no credit check, no closing costs, and an unchanged payoff date. The drawbacks are worth weighing too. A recast ties up a large lump sum in home equity, which is far less liquid than cash. It doesn’t shorten your loan or lower your rate, and if market rates have dropped sharply, a refinance might save more. And because the payment falls but the term doesn’t, total interest savings are smaller than if you’d kept paying the higher amount.
Recast vs. refinance vs. extra payments
Recasting is one of three ways to use a chunk of cash on your mortgage. Refinancing replaces the loan with a new rate and term — potentially bigger savings, but with closing costs and a credit check; compare the two with our mortgage recast vs. refinance tool. Extra principal payments keep your payment the same and shorten the loan, getting you to payoff faster. Recasting sits in between: it lowers your payment while keeping your rate and payoff date. Which one wins depends on your goal — cash flow, fastest payoff, or lowest lifetime cost.
Is a recast worth it for you?
A recast is usually worth it when you hold a low fixed rate, you’ve received a windfall, and you value lower monthly payments over a faster payoff. Run the numbers in the calculator above, then read our deeper analysis of whether mortgage recasting is worth it for the full break-even logic. If you want the conceptual overview first, start with how a recast mortgage works.