What Is Mortgage Recasting?

Mortgage Recasting Explained

Mortgage recasting lets homeowners lower their monthly payments by making a large, one-time payment on the main balance of their loan. Unlike refinancing, recasting does not change the interest rate or loan terms on your current mortgage. This is only open for certain mortgages, and lenders will say if you can use it.

It gives an easier, less costly way to pay less each month without a new loan. The lender does not check your credit or need long approvals when you recast your mortgage loan. By making the loan smaller, this helps you save money on the total interest over the full time you have the loan.

Are you set to look into how mortgage recasting works and if it could be the right money choice for you? Let’s get into it.

How Mortgage Recasting Works

For homeowners who want to lower their monthly payments and not deal with the work of refinancing, mortgage recasting could be a good choice. This process happens when you give a large amount of money as a payment on the main part of your loan. Then, your payment plan gets recalculated. A mortgage recast does not change your loan terms or interest rate, but it does lower what you need to pay each month and helps you save money on interest over time.

How the Recast Process Reduces Payments

Mortgage recasting means you make a large extra payment on your loan balance. After this, your lender will work out a new payment plan for you. The new plan gives you lower monthly payments, but your interest rate and loan terms stay the same.

Unlike refinancing, which means you get a new loan to replace your current loan, recasting just changes the mortgage you already have. You will not need credit checks or a lot of paperwork. This way is faster and costs less compared to getting a new loan.

What Mortgage Recasting Means for Borrowers

Mortgage recasting, also called reamortization, can help you lower your monthly payments. The lender does this by working out your payments again based on a smaller loan amount. With this, the time you have left to pay back your loan does not change. Your interest rate also stays the same.

For example, if you make a one-time payment of $30,000 on a $300,000 mortgage, your monthly payment will go down a lot. You will not change the length of the loan or the interest rate by doing this. This way is good for homeowners who have some extra money from a bonus, inheritance, or selling a property. It is for people who want to pay less each month without needing to refinance.

How It Differs from Refinancing

Mortgage recasting is not the same as refinancing. When you refinance, you replace your current loan with a new one. This new loan might have a different interest rate or length. Recasting works in another way. You change your payment schedule because you have paid down some of what you owe. But you still keep the same loan you had from the start.

Refinancing often comes with more costs like credit checks, appraisal fees, and closing costs. On the other hand, recasting is quicker and often just needs a small processing fee. But if interest rates have dropped a lot, then refinancing can give you more savings than recasting.

Think of refinancing like you are trading your car for a different one. Recasting is like keeping your car but making it run better. The two options both have good things about them. Which one you choose will depend on your goals and what you want to get out of it.

Features of Mortgage Recasting

Mortgage recasting has a few good points, especially for homeowners who want to keep the same loan terms. Here are some important things about it:

• A big one-time payment that goes straight to your principal. The lender will usually set a lowest amount you can pay.
• Your monthly mortgage payments can get smaller after they work out a new loan schedule.
• The interest rate and loan term will stay the same.
• There is no credit check or long approval process.

When to Recast Your Mortgage

You can change your mortgage term when your loan meets what the lender wants. You also need to have enough money to make a large payment all at once. Most lenders want you to make several months of payments on time before they say yes to a recast.

Recasting usually happens when you get extra money, like from an inheritance, a bonus, or selling a property. For example, if you buy a new home and then sell your old one, you can use the money from that sale to recast your current mortgage.

Timing matters a lot. If you want to sell or get a new loan soon, recasting may not be good for your money. Look at your bigger goals. Talk with your lender before you move forward.

Loan Types That Qualify for Recasting

Not every loan can get a mortgage recast. Most of the time, only regular mortgages are allowed for this. Loans backed by the government often do not let you do a recast. If you have a jumbo loan, you need to check with your lender because they all have their own rules.

Always check with your lender about the rules for recasting before you make a choice.

Who Benefits Most from Mortgage Recasting

Mortgage recasting can be a good choice for people who have some extra money and want lower monthly payments but do not want to refinance. You put a large payment toward your loan, which brings down how much you owe. This makes the payments each month easier to handle, but you still have the same loan terms.

This choice is very good for people who want to build up their home ownership and keep steady loan terms. It helps homeowners who do not want to go through the steps of a credit check for refinancing.

When Recasting Makes Financial Sense

Here are a few times when mortgage recasting can be a good idea:

• Inheriting a large sum: Use the money you get to pay down your mortgage balance and lower what you pay each month.
• Selling an older property: Put the money from your sale on your current loan when you get a new home.
• Receiving bonuses or commissions: Add your extra income to your loan to lower what you owe.
• Planning long-term savings: Make room in your budget each month and pay less interest as time goes on.

These cases show how recasting can help with quick help and planning for money for the future.

How U.S. Homeowners Gain from Recasting

Mortgage recasting gives real benefits for many people who own homes in the U.S.:

• There can be lower monthly payments without you having to change your interest rate.
• You may pay less interest during the time of the loan.
• You might get to the amount of equity you need and stop paying for private mortgage insurance.
• You can have more money left over each month to use for other things you want or need.

By updating your loan plan to match the lower amount you now owe, recasting gives you more options. It can also help you save money. You do not have to deal with extra costs or wait as you would with refinancing.

Requirements for Recasting Eligibility

Before initiating the process, make sure you have:

• You must have enough savings to pay the full amount at once, usually $10,000 or more.
• You should have a strong record of making your mortgage payments on time.
• Your loan should be the right type, which is often a regular mortgage.
• Get a confirmation from your lender about the fees and what you need.

These things help make sure everything goes well and they also help you have a better chance of getting approved.

How to Recast Your Mortgage in 4 Steps

1. Contact Your Lender and Check Eligibility

Start by talking to your lender on the phone. Ask them if your mortgage can be recast and find out what you need to do for that. The lender may tell you that you need to pay a certain amount at once, have a good payment record, or have a certain type of loan. Be sure to get all this info before you go further.

Also, ask for details about recasting fees and what documents you need. Make sure to get something in writing that says you are able to do this before you move forward.

2. Make a Lump Sum Principal Payment

Use the money you have right now, like your savings, something you got as inheritance, or cash you get after selling a house, to make this one-time big payment. Make sure you pay at least the smallest amount your lender asks for. Check that this fits in with your bigger money plans.

After you send your payment, check with your lender to make sure it was put toward your main loan amount.

3. Pay the Recasting Fee and Submit Documentation

Lenders usually ask you to pay a recasting fee. This fee is often between $250 and $500. You might also have to give them some documents like payment confirmation, your mortgage statements, and proof that you own part of your home.

Send in all needed papers right away. This helps your lender finish the new calculation on time.

4. Receive a New Amortization Schedule

After your payment and papers are done, your lender will give you a new payment schedule. This new schedule will show your lower monthly payment. The lower amount you owe is there because your main loan amount is now less.

When you get it, start to make payments by the new plan.

Final Thoughts

Mortgage recasting is a good way for homeowners to get lower monthly payments. You do not need to refinance to do this. When you give a lump sum payment to your loan and change the payment schedule, you can make your money worries smaller. You still keep the same interest rate and loan time as before.

If you have some extra money and want a simple way to have more cash each month, mortgage recasting may work for you. Always talk to your lender first and think about your money goals before you decide.

Top Takeaways

• Mortgage recasting helps lower monthly payments without changing your interest rate or loan terms
• It requires a lump sum payment and is available for certain loan types only
• There are minimal fees, and the process avoids credit checks and lengthy approvals
• It suits homeowners with extra funds who want to reduce monthly costs without refinancing

Frequently Asked Questions

Is mortgage recasting available for all types of home loans?

No. A mortgage recast is mostly something you can get with a regular loan. You usually can not do this with FHA, VA, or USDA loans. Jumbo loans might work for this, but it depends on the lender.

How much money do I need to recast my mortgage?

Lenders usually ask for a single payment of $10,000 or more. This money goes to what you still owe on the main loan amount. The needs can be different, so make sure to check with your mortgage provider.

Will mortgage recasting affect my loan term or interest rate?

No. Recasting changes how much you pay each month because the amount you owe gets smaller. The time you have to pay off the loan and the interest rate stay the same.

What are the main advantages and disadvantages of mortgage recasting?

Advantages: You get lower monthly payments. There is less total interest to pay. There are no credit checks, and there are only small fees.
Disadvantages: Not every loan type gets this option. There are recasting fees too. Your interest rate and the term do not change.

Written by Christine Benz Updated June 21, 2025 by Albert Fang