What is a mortgage recast?
A mortgage recast — also called re-amortization — recalculates your monthly payment after you make a large principal payment, without refinancing.
How it works, step by step
- You make a lump-sum payment toward principal (servicers usually require a minimum, often $5,000–$10,000).
- You pay a one-time recast fee, commonly $150–$500.
- The servicer re-amortizes the reduced balance over your remaining term at your existing rate.
- Your monthly payment drops. Your rate, term and payoff date do not change.
What stays the same — and what changes
| Interest rate | Unchanged |
|---|---|
| Loan term / payoff date | Unchanged |
| Monthly payment | Lower |
| Total interest paid | Lower than doing nothing (but not as low as paying down principal without recasting) |
Who can recast?
Most conventional loans (backed by Fannie Mae or Freddie Mac) and many jumbo loans allow recasting. FHA, USDA and VA loans generally do not. Rules and minimums vary by servicer, so confirm before you send a lump sum expecting to recast.
Recast vs. refinance, in one line
A refinance replaces your loan (new rate, new term, closing costs). A recast keeps your loan and just lowers the payment for a small fee. If rates have dropped, compare a refinance too.