Making a large principal payment and asking your lender to re-amortize your loan at the new lower balance — lowering your monthly payment without refinancing. Small fee, no new loan needed.
A mortgage recast (or re-amortization) is a powerful but underused option. You make a large one-time principal payment, then the lender recalculates your monthly payment based on the new, lower balance — keeping the same interest rate and original loan term.
The result: your monthly payment drops, sometimes substantially. You haven't refinanced — there's no new loan, no credit pull, no appraisal, no closing costs (just a small recast fee, typically $200–$500). Your rate stays the same.
Best uses: you've come into a lump sum (inheritance, bonus, sale of a previous home) and want to permanently lower your mortgage payment without doing a refinance. Not every lender or loan program allows recasting — it's most common on conventional loans. FHA and VA generally don't allow it.
Example
You have a $320K mortgage at 6.5%, 25 years left, $2,022/month payment. You sell your previous home and net $80K. You recast by paying $80K toward principal. Your balance drops to $240K, your payment is recalculated to about $1,516/month — a $506/month reduction — at the same 6.5% rate, same payoff date.
Also known as
loan recast, re-amortization, mortgage recast