Mortgage Recast: A Flexible Way To Lower Your Monthly Payment

If you’re a homeowner looking for a way to reduce your monthly mortgage payment without refinancing, a mortgage recast might be the perfect solution. Recasting offers a lesser-known but potentially powerful financial strategy—especially in today’s market. Whether you’re navigating retirement, received a financial windfall, or just want a lower monthly bill, it’s worth understanding how a mortgage recast works and whether it’s the right fit for you.

What Is A Mortgage Recast?

A mortgage recast, also known as a loan recast, is when your lender recalculates your monthly mortgage payment after you make a substantial lump-sum payment toward your loan’s principal balance. Your loan term and interest rate remain the same—but your monthly payment drops because you now owe less.

Unlike refinancing, which replaces your existing mortgage with a new one (often with a different interest rate or term), recasting keeps your original mortgage in place. You just get a better monthly deal.

Example:

Suppose you owe $300,000 on your mortgage and receive a $50,000 inheritance. If you apply that $50,000 to your principal and recast your mortgage, your lender will recalculate your monthly payments based on a $250,000 balance, lowering what you owe each month.

Benefits Of A Mortgage Recast

• Lower Monthly Payments: By reducing the principal, you decrease how much you pay each month—without extending your loan term.
• Keep Your Current Rate: This is especially valuable if you locked in a low interest rate that would be hard to match with a refinance.
• Fewer Fees: Recasting usually involves a modest fee—often around $150–$500—compared to thousands in refinancing closing costs.
• No Credit Check: Since you’re not applying for a new loan, lenders typically don’t require a credit check or appraisal.

Who Should Consider A Recast?

A mortgage recast could be a good option if:

• You have a conventional loan and a significant lump sum to apply to your balance.
• You want to reduce your monthly expenses without changing your interest rate.
• You’re avoiding the hassle and cost of refinancing but want some payment relief.
• You’ve recently sold another property, received a bonus, or inherited money.

Recast vs. Refinance: What’s The Difference?

While refinancing may offer a better rate or allow you to change loan types, it typically comes with more red tape and cost. Recasting is simpler—but only beneficial if you’re staying with your current loan structure.

What Types Of Loans Can Be Recast?

Not all loans are eligible for recasting. Here’s a quick breakdown:

✅ Conventional Loans – Most conforming conventional loans are eligible.
❌ FHA, VA, USDA Loans – These government-backed loans typically cannot be recast.
❌ Jumbo Loans – May be eligible on a case-by-case basis but depends on the lender.
❌ Non-Agency Loans – Varies by investor.

Note: Always check with your lender (like us at ALCOVA Mortgage!) to confirm whether your loan qualifies.

How Do You Recast A Mortgage?

The process usually looks like this:

1. Make a Lump-Sum Payment – Typically, lenders require a minimum amount (often $5,000–$10,000).
2. Request a Recast – Contact your lender to initiate the recast. You may have to submit a formal application.
3. Pay a Fee – Most lenders charge a small processing fee.
4. New Payment Calculated – Your new lower monthly payment kicks in after recalculation.

Is Mortgage Recasting Right For You?

Recasting is best if:

• You’re happy with your current loan and rate.
• You have extra cash to put toward the principal.
• You’re looking for a cost-effective way to lower your monthly payment.

However, if you want to tap into home equity or change your loan terms, a cash-out refinance or rate-and-term refinance may be better options.

ALCOVA Mortgage: Helping You Choose The Best Path

At ALCOVA Mortgage, our team is here to help you explore your options and make the smartest move for your financial future. If you think a mortgage recast might work for you—or you’re curious about other ways to save—we’re ready to guide you.

👉 Contact us today to speak with a loan expert about recasting, refinancing, or any mortgage strategy that fits your life.