Mortgage Recasting.

In plain English

Mortgage recasting is when you pay a large lump sum toward your loan's principal (the amount you borrowed) and the lender recalculates your monthly payment based on the smaller balance. Your interest rate and remaining loan term stay the same, so only the monthly amount drops. Most lenders charge a small flat fee to recast and require a minimum lump sum. It is much cheaper and simpler than a refinance because you are not getting a new loan or new rate.

01Why it matters

If you come into a windfall and want a lower required payment without the cost and paperwork of refinancing, recasting can free up monthly cash flow for years.

02The math, step by step

You owe 250,000 dollars at a fixed rate with 25 years left. You pay a 50,000 dollar lump sum toward principal, dropping the balance to 200,000 dollars, and pay a recast fee. The lender re-spreads 200,000 dollars over the same 25 years at the same rate, so your monthly payment falls. You keep the original payoff date and rate. The minimum lump sum and the recast fee are set by your lender, so confirm both before you commit.

03What this is NOT

04Receipts

Every figure on this page is sourced to a primary document. Tap to open the original.