Mortgage Recasting 2026: Lower Payment Without Refinancing
Complete mortgage recasting guide 2026: How to lower your monthly payment with a lump sum, costs ($150-500), eligibility, process, vs refinancing comparison. Save $300+/month without losing your low rate!
💸 Lower Your Payment $300+/Month for Only $250!
Have a lump sum? Recast your mortgage to lower monthly payment without refinancing. Keep your low rate, save thousands, only $150-500 fee. No credit check required!
What Is Mortgage Recasting?
Mortgage recasting (also called re-amortization or loan recasting) is when you make a large lump-sum payment toward your mortgage principal, and your lender recalculates your monthly payment based on the new, lower balance while keeping your interest rate and loan term the same. Check if your lender offers recasting.
Think of it as a "payment reset" that lowers your monthly bill without refinancing. You pay down a chunk of principal, and your lender spreads the remaining balance over the remaining loan term at your existing interest rate.
💡 Key Concept: Recasting vs Refinancing
Recasting: Keep your current rate and term, make lump-sum payment, lower monthly payment. Costs $150-$500.
Refinancing: Get new loan with new rate and term, replace old loan entirely. Costs $3,000-$8,000.
Real Example: How Recasting Works
Scenario: You have a $400,000 mortgage at 3.5% with 25 years remaining. Monthly payment: $2,000.
Step 1: You receive $50,000 windfall
Inheritance, bonus, stock sale, or home sale proceeds.
Step 2: You make $50,000 lump-sum payment
New balance: $400,000 - $50,000 = $350,000
Step 3: Lender recasts your loan
Recalculates payment based on $350,000 balance over 25 years at 3.5%
Step 4: Your new monthly payment
$2,000 → $1,750 = $250/month savings!
💰 Total savings: $250/month × 300 months = $75,000 over life of loan!
How Does Mortgage Recasting Work?
The recasting process is simple and straightforward:
- 1.Contact Your Lender
Call your mortgage servicer and ask if they offer recasting. Not all lenders do, and some loan types aren't eligible.
- 2.Verify Eligibility
Check minimum lump-sum amount (usually $5,000-$10,000), loan type requirements, and any waiting periods.
- 3.Make Lump-Sum Payment
Send the lump-sum payment to your lender with instructions that it's for principal reduction and recasting.
- 4.Pay Recasting Fee
Pay the recasting fee ($150-$500, much cheaper than refinancing).
- 5.Lender Recalculates Payment
Lender re-amortizes your loan based on new balance, same rate, same remaining term. Process takes 30-60 days.
- 6.Start Making New Lower Payment
Your new, lower monthly payment begins. You keep your original interest rate and payoff date.
💰 Lower Your Monthly Payment with Recasting
Have a windfall? Contact your lender about recasting and see how much you can save on your monthly payment!
Calculate Recast Savings →Who Should Consider Mortgage Recasting?
Recasting is ideal for specific situations where you have cash to invest in your mortgage. Calculate your recast savings:
💼 Received Large Windfall
Inheritance, bonus, stock sale, lawsuit settlement, or business sale. You want to use it to lower monthly payments.
🏠 Sold Previous Home
You have equity from selling your old home and want to reduce payments on your new mortgage without refinancing.
📈 Have Low Interest Rate
Your current rate (3-4%) is lower than today's rates (7%+). Recasting keeps your low rate while lowering payments.
💸 Want Lower Monthly Payment
You want to reduce monthly expenses for cash flow, retirement, or lifestyle changes without refinancing.
🚫 Don't Want to Refinance
Refinancing costs $3,000-$8,000 and takes 30-60 days. Recasting costs $150-$500 and takes 30-60 days with less hassle.
⏰ Want to Keep Payoff Date
Recasting keeps your original payoff date. Refinancing resets the clock to 30 years.
Recasting vs Refinancing: Which Is Better?
Both recasting and refinancing can lower your monthly payment, but they work very differently:
| Feature | Recasting | Refinancing |
|---|---|---|
| Cost | $150-$500 | $3,000-$8,000 |
| Interest Rate | Stays the same | New rate (could be higher or lower) |
| Loan Term | Stays the same | Resets to 15 or 30 years |
| Monthly Payment | Lowers (based on lump sum) | Lowers (if rate drops or term extends) |
| Requires Lump Sum? | Yes ($5K-$10K minimum) | No |
| Credit Check? | No | Yes |
| Appraisal Required? | No | Yes ($500-$800) |
| Income Verification? | No | Yes |
| Timeline | 30-60 days | 30-60 days |
| Best For | Low rate, have cash, want lower payment | High rate, want to lower rate or change term |
When to Choose Recasting:
- ✓ Your current rate is 3-4% (lower than today's 7%+ rates)
- ✓ You have $10,000+ cash to put toward principal
- ✓ You want to keep your low interest rate
- ✓ You want to keep your original payoff date
- ✓ You want minimal cost and hassle
- ✓ You don't want credit check or income verification
When to Choose Refinancing:
- ✓ Your current rate is 6-8% (higher than today's rates)
- ✓ You want to lower your interest rate
- ✓ You want to change your loan term (30-year to 15-year)
- ✓ You want to switch loan types (ARM to fixed)
- ✓ You want to remove PMI
- ✓ You want cash-out refinancing
🤔 Not Sure Which Option Is Best?
Compare recasting vs refinancing options and see which saves you more money based on your situation!
Get Expert Advice →Mortgage Recasting Requirements
Not all loans qualify for recasting. Verify your loan eligibility. Here are the typical requirements:
✅ Eligibility Requirements
Conventional loans (Fannie Mae/Freddie Mac) usually allow recasting. FHA, VA, and USDA loans typically do NOT allow recasting.
Most lenders require $5,000-$10,000 minimum principal payment. Some require $20,000+.
Some lenders require you to have the loan for 12+ months before recasting. Check with your lender.
You must be current on your mortgage with no late payments in the past 12 months.
Not all lenders offer recasting. Call your servicer to verify they allow it.
Your escrow account must be current with no shortages or deficiencies.
⚠️ Important: FHA/VA Loans Usually Can't Recast
FHA, VA, and USDA loans typically do NOT allow recasting. If you have one of these loan types, you'll need to refinance instead if you want to lower your monthly payment after making a lump-sum payment.
How Much Does Mortgage Recasting Cost?
Recasting is one of the cheapest ways to lower your mortgage payment:
💰 Typical Recasting Costs
💰 Massive Savings vs Refinancing!
Recasting costs 90-95% LESS than refinancing:
- • Recasting: $150-$500
- • Refinancing: $3,000-$8,000
- • You save: $2,500-$7,500!
Pros and Cons of Mortgage Recasting
✅ Pros
- ✓Very Low Cost: $150-$500 vs $3,000-$8,000 for refinancing. Save thousands in fees.
- ✓Keep Your Low Rate: If you have 3-4% rate, you keep it. Don't lose it to today's 7%+ rates.
- ✓Lower Monthly Payment: Reduce monthly expenses for better cash flow, retirement, or lifestyle changes.
- ✓No Credit Check: Your credit score doesn't matter. No income verification or employment check.
- ✓Keep Payoff Date: Your original loan term stays the same. Don't reset the clock to 30 years.
- ✓Simple Process: No appraisal, no title search, minimal paperwork. Much easier than refinancing.
❌ Cons
- ✗Requires Large Lump Sum: Need $5,000-$10,000+ cash. Not everyone has this available.
- ✗Not All Loans Qualify: FHA, VA, USDA loans usually can't recast. Only conventional loans typically allow it.
- ✗Not All Lenders Offer It: Some servicers don't allow recasting. Check before making lump-sum payment.
- ✗Can't Change Rate or Term: You're stuck with your current rate and term. Can't switch to 15-year or get lower rate.
- ✗Opportunity Cost: Money used for recasting can't be invested elsewhere (stocks, retirement, etc.).
- ✗Doesn't Shorten Loan Term: Payoff date stays the same. If you want to pay off faster, make extra payments instead.
Alternatives to Mortgage Recasting
If recasting doesn't work for you, consider these alternatives:
1. Make Extra Principal Payments (Without Recasting)
Make lump-sum or extra monthly payments toward principal without recasting. Your monthly payment stays the same, but you pay off the loan faster and save on interest. Learn about extra payment strategies.
Best for: People who want to pay off mortgage early but don't need lower monthly payment.
2. Refinance to Lower Rate
If rates have dropped below your current rate, refinancing can lower your monthly payment by 10-30%. Costs $3,000-$8,000 but no lump sum required. Compare refinance rates.
Best for: People with high rates (6-8%) who want to lower rate without lump sum.
3. Refinance to Shorter Term
Refinance from 30-year to 15-year mortgage. Higher monthly payment but pay off faster and save massive interest (often $100K+). Get 15-year refinance quotes.
Best for: People who want to pay off mortgage faster and can afford higher payments.
4. Invest the Money Instead
If your mortgage rate is 3-4%, investing in stocks (8-10% average return) may earn more than you save on mortgage interest.
Best for: People with low mortgage rates who want to maximize wealth building.
5. Bi-Weekly Payment Plan
Make half your monthly payment every two weeks (26 half-payments = 13 full payments per year). Pay off mortgage 4-6 years early.
Best for: People who get paid bi-weekly and want to pay off mortgage faster without lump sum.
🎯 Ready to Lower Your Monthly Payment?
Contact your lender about recasting or explore refinancing options to find the best way to save money on your mortgage!
Get Started Now →Frequently Asked Questions
What is mortgage recasting and how does it work?
Mortgage recasting is when you make a large lump-sum payment toward principal ($5,000-$10,000+), and your lender recalculates your monthly payment based on the new lower balance while keeping your interest rate and loan term the same. Example: $400K loan at 3.5%, pay $50K lump sum, new balance $350K, payment drops from $2,000 to $1,750/month.
How much does mortgage recasting cost?
Recasting costs $150-$500 (one-time fee). Much cheaper than refinancing ($3,000-$8,000). No credit check, appraisal, or income verification required. You save $2,500-$7,500 compared to refinancing while achieving similar monthly payment reduction.
Can FHA and VA loans be recast?
No, FHA, VA, and USDA loans typically do NOT allow recasting. Only conventional loans (Fannie Mae/Freddie Mac) usually allow recasting. If you have FHA/VA loan and want lower payment after lump-sum payment, you'll need to refinance instead.
What is the difference between recasting and refinancing?
Recasting: Keep current rate and term, make lump-sum payment, lower monthly payment, costs $150-$500. Refinancing: Get new loan with new rate and term, replace old loan, costs $3,000-$8,000. Recasting is cheaper and simpler but requires lump sum and keeps your current rate. Refinancing can change rate/term but costs more.
Should I recast my mortgage or invest the money?
Depends on your mortgage rate and investment returns. If rate is 3-4%, investing in stocks (8-10% average return) may earn more than you save on mortgage interest. If rate is 6-8%, recasting saves more. Also consider: Need for cash flow? Risk tolerance? Debt-free peace of mind? No single right answer - depends on your financial goals.
Final Thoughts
Mortgage recasting is a powerful but underutilized tool for homeowners who have cash to invest in their mortgage and want to lower their monthly payment without refinancing.
Key takeaways:
- Recasting costs $150-$500 vs $3,000-$8,000 for refinancing
- You keep your current interest rate and loan term
- Requires $5,000-$10,000+ lump-sum payment toward principal
- Only conventional loans typically allow recasting (not FHA/VA/USDA)
- No credit check, appraisal, or income verification required
- Process takes 30-60 days
If you have a low interest rate (3-4%) and receive a windfall (inheritance, bonus, home sale proceeds), recasting is an excellent way to lower your monthly payment while keeping your great rate. It's much cheaper and simpler than refinancing.
However, if your current rate is high (6-8%) or you want to change your loan term, refinancing may be a better option despite the higher cost.
💡 Next Steps
- Contact your mortgage servicer to verify they offer recasting
- Ask about minimum lump-sum amount and recasting fee
- Calculate how much your payment would drop after recasting
- Compare recasting vs refinancing vs investing the money
- If recasting makes sense, make the lump-sum payment and request recasting
- Verify your new lower payment starts within 30-60 days
Meet Michael
Reverse Mortgage & Senior Specialist
Michael Thompson is a leading expert in reverse mortgages and senior financing solutions with 15 years of specialized experience. As a certified HECM specialist, he has helped thousands of seniors access their home equity for retirement planning. His compassionate approach and deep knowledge of FHA reverse mortgage guidelines make him a trusted advisor for families navigating senior housing and financial planning decisions.
EXPERTISE:
KEY ACHIEVEMENT:
Helped 3,000+ seniors access $500M+ in home equity