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Mortgage Recast
A mortgage recast is when you make a large lump-sum payment toward your principal and your lender re-amortizes the remaining balance over the remaining term at your existing interest rate, lowering your monthly payment.
How It Works
A mortgage recast (also called re-amortization) is a little-known alternative to refinancing. After making a large principal payment (typically $5,000-$10,000 minimum), your lender recalculates your monthly payment based on the new, lower balance — keeping your existing interest rate and remaining term. The fee is usually just $150-$500. Recasting is ideal for borrowers who have a lump sum (inheritance, bonus, home sale proceeds) and already have a good interest rate. Unlike refinancing, there's no credit check, no appraisal, no income verification, and no closing costs. The process takes 1-2 weeks. The main limitations: not all lenders offer recasting, and government-backed loans (FHA, VA, USDA) generally cannot be recast.
Key Facts
Fee: $150-$500 (vs. $5,000-$15,000 for refinancing)
No credit check, appraisal, or income verification required
Keeps your existing interest rate and remaining term
Requires a lump-sum principal payment (typically $5,000+ minimum)
Process takes 1-2 weeks (vs. 30-45 days for refinancing)
Not available on FHA, VA, or USDA loans
Not all conventional lenders offer recasting
Example
Current balance: $300,000 at 3.5%, 25 years remaining. Payment: $1,501/month. You make a $50,000 lump-sum payment and recast. New balance: $250,000. New payment: $1,251/month. You save $250/month for a $250 fee.
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Frequently Asked Questions
If you already have a low interest rate and have a lump sum, recasting is almost always better. It's faster, cheaper, and preserves your rate. Refinancing only wins if you need a lower rate or want to change your loan term.
Most lenders require a minimum lump-sum payment of $5,000 to $10,000. The larger the payment, the more your monthly payment decreases. There's no maximum.