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Make a lump-sum payment toward principal and your servicer re-amortizes the loan: a lower monthly payment, the same rate and the same payoff date. Enter your numbers to see your new payment.
Estimate of principal and interest only (excludes taxes, insurance and mortgage insurance). The starting numbers are an example, not a quote. Your servicer calculates the actual recast payment, minimum lump sum and fee.
A recast never changes your interest rate or payoff date. If you want a different rate or term, compare a refinance. To see how extra payments shorten the loan instead, use the mortgage payoff calculator.
Say you owe $500,000 at an example rate of 3.25% with 26 years left. Your principal-and-interest payment is about $2,376. You pay $100,000 toward principal and recast.
| Before | After recast | |
|---|---|---|
| Loan balance | $500,000 | $400,000 |
| Interest rate | 3.25% | 3.25% |
| Years remaining | 26 | 26 |
| Monthly principal and interest | $2,376 | $1,901 |
That is about $475 less every month and roughly $48,000 less interest over the rest of the loan. Prepaying the same $100,000 without a recast would leave your payment at $2,376 but pay the loan off about seven years early. The recast trades some of that interest savings for a lower required payment.
| Recast | Refinance | Pay extra | |
|---|---|---|---|
| Monthly payment | Lower | Depends on the new rate | Unchanged |
| Interest rate | Same | New rate | Same |
| Payoff date | Same | New term | Earlier |
| Cost | Small flat fee | Closing costs | None |
| Credit check and appraisal | No | Yes | No |
For a deeper comparison, read mortgage recast vs. refinance.
Not sure what fits? The complete mortgage recast guide covers how to request one, and a HELOC or bridge loan may suit you better if you need to stay liquid.
It tends to fit when you hold a rate you do not want to give up, you have a lump sum (a bonus, an inheritance, stock vesting or proceeds from selling a home), and you want lower monthly payments more than a faster payoff. It is popular with California move-up buyers who buy first and recast after the old home sells.
It tends not to fit when you need that cash to stay liquid (money sent to principal only comes back through a sale, refinance or HELOC), you plan to sell soon, or you have an FHA, VA or USDA loan.
Your servicer subtracts the lump sum from your balance, then re-amortizes what is left over the months remaining on the loan at your existing rate. The same formula that set your original payment sets the new, smaller one. This calculator does exactly that.
No. A recast keeps your interest rate and your original payoff date and lowers the required monthly payment. If your goal is to pay the loan off sooner, keep the payment the same and use extra payments instead. The mortgage payoff calculator shows how much time that saves.
Servicers set their own minimum, often somewhere between $5,000 and $10,000 or a percentage of your balance, and some do not offer recasts at all. Ask your servicer for its recast policy and fee in writing before you send any money.
No. Nothing is re-underwritten, so there is no new loan, credit pull or appraisal. Most servicers do want the loan to be current with no missed payments, and they charge a flat fee, usually in the low hundreds of dollars.
Generally no. Most conventional loans owned by Fannie Mae or Freddie Mac can be recast at the servicer’s discretion, and jumbo or portfolio loans depend on the lender’s own policy. With an FHA or VA loan, the usual alternatives are a refinance or simply paying down principal.
It depends on your rate. If you like the rate you have and you are holding cash, a recast lowers the payment for a small fee and no closing costs. If a refinance could cut your rate or change your term, it may save more. As an independent broker, Save Financial can compare both for your loan.
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