You just got a $50,000 bonus, sold some stock, or inherited money.
You could throw it at your mortgage and keep the same monthly payment. Or you could recast your mortgage and lower your payment by hundreds per month — without refinancing.
Most homeowners have never heard of recasting. It's one of the smartest moves you can make if you've got a lump sum and a low rate you want to keep.
I'm Bill McCoy, a California mortgage broker (CA DRE #01212512). Here's exactly how recasting works.
What Is a Mortgage Recast?
A mortgage recast (also called re-amortization) is when you make a large principal payment, and your lender recalculates your monthly payment based on the new, lower balance.
Your interest rate stays the same. Your loan term stays the same. Only your payment changes.
Quick Example
- Original loan: $500,000 at 4.5% (30-year fixed)
- Original payment: $2,533/month
- You pay $100,000 toward principal
- New balance: $400,000
- New payment: $2,027/month
- You save $506/month — that's $6,072/year
All it cost? A recast fee of $150 to $500.
How It Works in 4 Steps
- Make a lump-sum principal payment. Most lenders require $5,000 to $10,000 minimum.
- Pay the recast fee. Usually $150-$500 — a fraction of refinance closing costs.
- Lender recalculates your payment based on the new balance, same rate, same remaining term.
- Your lower payment starts the following month. Timeline: 30-60 days.
That's it. No credit check. No income verification. No appraisal.
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Who Should Consider a Recast?
Recast if:
- You've got a lump sum of $10,000+ (bonus, inheritance, stock sale)
- Your interest rate is below 5%
- You want lower monthly payments and cash flow flexibility
- You don't want the hassle of refinancing
Don't recast if:
- Current rates are lower than your rate — refinance instead
- You have an FHA, VA, or USDA loan (they don't allow recasts)
- You'd rather pay off your mortgage faster instead of lowering payments
Broker's Tip: If you locked in a 3.5% rate in 2021 and current rates are 6.5%, don't refinance. Recast instead. You'll keep your low rate and drop your payment.
Recast vs. Refinance at a Glance
| Feature | Recast | Refinance |
|---|---|---|
| Interest rate | Stays the same | Changes to current rate |
| Cost | $150-$500 | $4,000-$10,000+ |
| Credit check | No | Yes |
| Appraisal | No | Yes |
| Best for | Keeping your low rate | Getting a lower rate |
Bottom line: Recast if you've got a great rate. Refinance if today's rates beat yours.
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Want the full comparison with real numbers? Read Mortgage Recast vs. Refinance: Which Saves You More?
Ready to See If Recasting Makes Sense?
Not sure whether to recast, refinance, or do something else? I'll look at your rate, balance, and goals and tell you the best move.
Better Offers Inc | CA DRE #01212512