1. What Is a Recast?
A recast happens when a borrower makes a large one-time payment toward the principal balance—such as from a work bonus, sale proceeds from another property, or other unexpected income. After that payment, the lender can recalculate your monthly payment based on the new, lower balance.
Key features of a recast:
- Interest rate stays the same — you keep your original rate.
- Loan term stays the same — no change to your remaining years.
- Monthly payment decreases — because the principal is smaller.
In short, a recast lets you lower your monthly payment by paying down part of your loan—without going through the time and cost of refinancing.
2. Basic Requirements
According to UWM (United Wholesale Mortgage) guidelines:
- The borrower must request a recast directly.
- A minimum of $5,000 must be paid toward the principal in a lump sum.
- The lender charges a $150 recast fee.
Other lenders may have slightly different rules, but the process is similar:
- Submit the recast request.
- Make a lump-sum principal payment.
- Pay the processing fee.
- The lender recalculates your new monthly payment.
3. Example
Suppose your current loan balance is $400,000 at 6% interest over 30 years.
You receive extra funds and decide to pay $50,000 toward the principal.
After a recast, your new balance becomes $350,000.
The rate and term remain unchanged, but your monthly payment drops significantly.
Compared with refinancing, a recast is much simpler, cheaper, and doesn’t require new income or credit verification.
4. Recast vs. Refinance
| Feature | Recast | Refinance |
|---|---|---|
| Changes interest rate | ❌ No | ✅ Yes |
| Requires new credit review | ❌ No | ✅ Yes |
| Fees | 💲Low (e.g., $150) | 💲High (usually thousands) |
| Changes loan terms | ❌ No | ✅ Yes |
| Main purpose | Lower monthly payment | Get lower rate or change loan type |
5. Important Notes
- Not all loans qualify for a recast—typically only conventional loans do.
- FHA, VA, and USDA loans usually do not allow recasts.
- A recast does not change your interest rate or loan term.
- Always confirm your lender’s specific fees, eligibility, and documentation requirements before applying.
6. Summary
A Mortgage Recast is a flexible and cost-effective option for homeowners who:
- Have received a large sum of money and want to reduce monthly payments.
- Prefer not to refinance but still wish to save on interest costs.
If you’ve recently come into extra funds or sold another property, check with your lender to see if your loan qualifies for a recast—it could make your mortgage much lighter.