Mortgage recast
What is mortgage recast?
A recast applies a lump sum to your principal and then re-amortizes the smaller balance over your remaining term, keeping your existing interest rate and payoff date. It lowers the required monthly payment.
How it is calculated
New payment = amortize (current balance − lump sum) at the existing rate over the remaining term
What it means in practice
A recast is not a refinance. There is no new loan, no new rate, no underwriting, and typically only a small servicer fee rather than full closing costs.
It is the only way to lower a required monthly payment while keeping a below-market interest rate. Extra principal payments alone do not reduce the required payment — they only shorten the loan.
Availability varies. Many servicers require a minimum lump sum, charge a processing fee, and exclude government-backed loans such as FHA and VA. Confirm eligibility with your servicer before planning around it.