In today's high interest rate environment, refinancing your mortgage often means trading your existing rate for a significantly higher one. But what if you could lower your monthly payments without changing your interest rate? That's exactly what mortgage recasting offers—a little-known strategy that can save you hundreds of dollars each month while preserving your favorable interest rate.
Quick Answer
Mortgage recasting is when you make a large lump sum payment toward your principal balance (typically $5,000-$50,000) and your lender recalculates your monthly payments based on the new lower balance while keeping your interest rate and loan term unchanged. This can reduce your monthly payment by $100-500 depending on the amount paid and remaining term.
This comprehensive guide will walk you through everything you need to know about mortgage recasting in 2025, including how it works, its benefits and drawbacks compared to refinancing, which loans qualify, and exactly how to request a recast from your lender.
Mortgage Recasting: Key Stats for 2025
What Is Mortgage Recasting?
Mortgage recasting (also called loan recasting or principal curtailment) is a process where you make a large lump sum payment toward your mortgage principal, and then your lender recalculates your monthly payments based on the new, lower principal balance. Unlike refinancing, recasting keeps your original loan terms intact—same interest rate, same loan term, same loan type.
âś… Recasting Benefits
- • Lower monthly payments
- • Keep your existing interest rate
- • No credit check required
- • No income verification needed
- • No appraisal necessary
- • Minimal fees ($250-500 typically)
- • Fast processing (30-45 days)
❌ Recasting Limitations
- • Requires significant cash upfront
- • Not available for all loan types
- • Doesn't shorten loan term
- • Doesn't lower interest rate
- • Not all lenders offer recasting
- • Less impact with shorter remaining term
- • Cash becomes illiquid once applied
How Mortgage Recasting Works
The mortgage recasting process is straightforward but requires understanding a few key steps:
Step 1: Make a Lump Sum Payment
You make a significant payment toward your mortgage principal—typically at least $5,000, though many lenders require $10,000 or more. This payment is applied directly to your principal balance, not to interest or escrow.
Step 2: Request the Recast
Contact your loan servicer to request a recast. Most lenders have a specific recast request form. You'll typically pay a processing fee at this time (usually $250-500).
Step 3: Lender Recalculates Payments
Your lender will recalculate your monthly payment based on the new lower principal balance, while keeping your original interest rate and remaining loan term the same.
Step 4: Begin Making Lower Payments
Once approved (typically 30-45 days), you'll receive confirmation of your new, lower monthly payment amount and the effective date.
Example: Recasting a $300,000 Mortgage
| Scenario | Before Recast | After $25,000 Recast | Monthly Savings |
|---|---|---|---|
| 30-Year Fixed (4.5%) | $1,520/month | $1,393/month | $127/month |
| 15-Year Fixed (4.0%) | $2,219/month | $2,034/month | $185/month |
| 30-Year Fixed (6.5%) | $1,896/month | $1,738/month | $158/month |
*Calculations assume $300,000 initial balance with 25 years remaining on 30-year loans and 10 years remaining on 15-year loan.
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Recasting vs. Refinancing: Which Is Better in 2025?
With mortgage rates significantly higher in 2025 than they were a few years ago, many homeowners are looking for alternatives to refinancing. Here's how recasting compares:
| Feature | Mortgage Recasting | Refinancing |
|---|---|---|
| Interest Rate | Keeps existing rate | New rate (likely higher in 2025) |
| Upfront Cost | Lump sum payment + small fee | 2-5% of loan amount in closing costs |
| Processing Time | 30-45 days | 45-60 days |
| Credit Check | Not required | Full credit check |
| Income Verification | Not required | Full documentation needed |
| Appraisal | Not required | Usually required ($400-600) |
| Loan Term | Remains the same | Can be shortened or extended |
| Best For | Homeowners with low rates who have cash to invest | Homeowners with high rates or who need cash out |
When Refinancing Still Makes Sense in 2025
- You currently have a much higher interest rate than market rates
- You need to access equity through a cash-out refinance
- You want to change your loan type (e.g., from ARM to fixed)
- You want to remove a co-borrower from the loan
- You need to eliminate mortgage insurance
Which Loans Qualify for Recasting in 2025?
Not all mortgages can be recast. Here's a breakdown of which loans typically qualify and which don't:
Loans That Usually Qualify
- Conventional loans backed by Fannie Mae or Freddie Mac
- Jumbo loans from most major lenders
- Portfolio loans (held by the original lender)
- Some non-conforming loans (lender discretion)
Loans That Typically Don't Qualify
- FHA loans (government-backed)
- VA loans (veterans' loans)
- USDA loans (rural development loans)
- Adjustable-rate mortgages (ARMs) during adjustment period
- Loans in forbearance or modification
Major Lenders That Offer Recasting in 2025
Chase
$5,000 minimum
Bank of America
$10,000 minimum
Wells Fargo
$5,000 minimum
Rocket Mortgage
$10,000 minimum
U.S. Bank
$5,000 minimum
Truist
$10,000 minimum
*Requirements and fees vary by lender. Always check with your specific loan servicer for their current policies.
Step-by-Step Guide to Recasting Your Mortgage
Ready to recast your mortgage? Follow these steps to ensure a smooth process:
Step 1: Confirm Eligibility
Contact your loan servicer to verify:
- That your loan type qualifies for recasting
- The minimum lump sum payment required (typically $5,000-$10,000)
- The recasting fee (usually $250-500)
- Any specific requirements or restrictions
Step 2: Prepare Your Finances
Before proceeding:
- Ensure you have sufficient funds for the lump sum payment
- Consider opportunity costs of using this cash
- Make sure you have 3-6 months of emergency savings remaining
- Calculate your expected monthly savings to confirm it's worth the investment
Step 3: Submit the Lump Sum Payment
Make your principal payment:
- Specify that this is a "principal-only payment"
- Indicate that you intend to recast the loan afterward
- Keep documentation of the payment for your records
- Some lenders require the payment to be made separately from your regular payment
Step 4: Submit Recast Request
Complete the formal request:
- Fill out your lender's recast agreement form
- Pay the recasting fee
- Provide proof of the principal payment if required
- Submit all documentation according to lender instructions
Step 5: Follow Up and Confirm
After submission:
- Confirm receipt of your request with your lender
- Ask for an estimated processing timeline
- Continue making your current mortgage payments until notified of the change
- Follow up weekly if you don't hear back within 30 days
Step 6: Review New Payment Schedule
Once approved:
- Review the new amortization schedule
- Verify the new monthly payment amount
- Confirm the effective date for the new payment
- Update your autopay or bill pay settings if necessary
Ready to Lower Your Monthly Payment?
Check if your mortgage qualifies for recasting and calculate your potential savings.
Mortgage Recasting Savings Calculator
Use this table to estimate your potential monthly savings from recasting your mortgage with different lump sum payment amounts:
| Lump Sum Payment | Monthly Savings (30-Year, 4% Rate) | Monthly Savings (30-Year, 6% Rate) | Monthly Savings (15-Year, 5% Rate) |
|---|---|---|---|
| $10,000 | $48/month | $60/month | $79/month |
| $25,000 | $119/month | $150/month | $198/month |
| $50,000 | $239/month | $300/month | $395/month |
| $100,000 | $477/month | $600/month | $790/month |
*Calculations assume $300,000 initial balance with 25 years remaining on 30-year loans and 10 years remaining on 15-year loan.
Frequently Asked Questions About Mortgage Recasting
Is mortgage recasting the same as making extra principal payments?
No. While both reduce your principal balance, extra principal payments don't change your monthly payment amount—they just help you pay off the loan faster. Recasting actually recalculates and reduces your required monthly payment while keeping the loan term the same.
How often can I recast my mortgage?
Most lenders limit recasting to once per year, and some may have a lifetime limit (typically 2-3 times over the life of the loan). Check with your specific lender for their policy.
Will recasting affect my credit score?
No, mortgage recasting has no impact on your credit score. Unlike refinancing, there's no credit check involved, and it doesn't create a new loan or change your payment history.
Can I recast my mortgage if I'm self-employed?
Yes. Since recasting doesn't involve income verification or a new loan application, being self-employed doesn't affect your eligibility. As long as your loan type qualifies and you meet the lump sum requirement, employment status doesn't matter.
Does recasting reduce the total interest paid over the life of the loan?
Yes. By reducing your principal balance, you'll pay less total interest over the remaining life of the loan. However, since the term remains unchanged, the interest savings aren't as significant as they would be if you made extra payments without recasting and paid off the loan early.
What happens to my escrow account when I recast?
Recasting only affects the principal and interest portion of your payment. Your escrow payment for taxes and insurance remains unchanged unless your lender performs a separate escrow analysis.
Can I use money from a cash-out refinance to recast another mortgage?
Yes, this strategy is sometimes used when you have multiple properties. You could cash out equity from one property with a higher rate and use those funds to recast a mortgage on another property that has a lower rate you want to preserve.
What if my lender doesn't offer recasting?
If your current servicer doesn't offer recasting, you have a few options: make extra principal payments (which won't lower your monthly payment but will shorten your loan term), refinance if rates are favorable, or in some cases, you might be able to transfer your loan to a servicer that does offer recasting.
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Find out if your mortgage qualifies for recasting and how much you could save each month without changing your interest rate.
Check Your Recasting Options