Recasting Your Mortgage: A Simple Way to Lower Your Payments Without Refinancing

Rebecca Richardson
4 days ago
4 min read

Buying a home is a big deal, but it can feel even bigger when you're trying to juggle multiple financial goals. Maybe you’re buying your next home before selling your current one. The idea of a bigger mortgage payment is already stressing you out. That’s where recasting comes in. It's a tool that could save you hundreds each month—without the headaches of refinancing.

Let’s take a quick look at how recasting works and how it could make your mortgage more manageable.

What is Mortgage Recasting?

Recasting is a way to lower your monthly mortgage payment after you've already bought the home. Unlike refinancing, you don’t get a new loan or interest rate. Instead, you make a lump-sum payment to reduce your principal. Your servicer then recalculates your monthly payment based on the lower balance.

Think of it like paying off a chunk of your loan upfront so you can enjoy smaller payments moving forward. And the best part? It’s a lot cheaper and less complicated than refinancing.

Example:

Say you took out a $400,000 mortgage with a 6.75% interest rate. Your monthly payment (just for principal and interest) is about $2,500. A year later, you decide to apply $100,000 toward your mortgage. Now, your loan balance is $300,000, and your new monthly payment drops to about $1,950. That’s a $650 monthly savings.

Why Is Recasting So Helpful Right Now?

Right now, many homeowners have a good chunk of equity in their homes but can’t access it without selling. So how do you buy a new home without that cash? Recasting allows you to buy with as little as 5-10% down, and then reduce your mortgage payment once the sale is final. You don’t need to tap into retirement accounts or liquidate assets like stocks—just apply your lump-sum payment after you move in.

This is especially useful in today’s competitive market. Sellers often don’t want to accept offers that are contingent on the sale of another property. Recasting lets you buy the house you want now and adjust your payments later.

How Does Recasting Work?

Here’s how you can apply a recast to your mortgage:

Make a Lump-Sum Payment: You’ll need to pay at least $5,000–$10,000, but the bigger the payment, the lower your future payments will be.
Recalculate Your Payment: Your lender will reduce your loan balance and recalculate your monthly mortgage payment based on the new amount.
Small Fees: You’ll pay a processing fee (usually around $250–$500), but that’s far cheaper than the closing costs associated with refinancing.

Pro Tip:

Before moving forward, make sure your lender allows recasting. Not all servicers do, and each one has its own rules and requirements. Some may require you to make a couple of payments before they’ll process the recast.

Who Can Recast Their Mortgage?

Recasting typically works with conventional loans, but not FHA, VA, USDA, or most jumbo loans. You'll also need to make a few payments before the recast can happen—often at least two. So, make sure you’re clear on the policies your servicer has in place.

Pro Tip:

Call your mortgage servicer before you apply for a recast. Ask about their minimum payment requirements and how long you’ll need to wait before you can start the process.

What to Keep in Mind About Recasting

Though recasting is a great option, there are some things you need to be aware of:

Not All Servicers Offer It: Some mortgage servicers don’t allow recasting. You’ll need to check with yours first.
Lump Sum Required: You have to have the lump sum available to reduce your loan balance.
No Shortened Term: Recasting doesn’t shorten your mortgage term, it just lowers your monthly payment. You’ll still have the same 30-year term unless you refinance.
Mortgage Insurance: If you put less than 20% down, you may have to deal with mortgage insurance. Some lenders will require a few payments before removing it, so check with your lender on their requirements.

Pro Tip:

If you’re looking to eliminate mortgage insurance through recasting, make sure your loan balance reaches 80% of the home’s value. This is typically when your mortgage insurance can be removed.

FAQ: What’s the Difference Between Recasting and Refinancing?

Recasting involves making a lump-sum payment to reduce your loan balance, which lowers your monthly payment. Refinancing, on the other hand, involves replacing your existing loan with a new one, often at a different interest rate. Recasting is simpler and less expensive than refinancing.

FAQ: Can I Use Recasting to Remove Mortgage Insurance?

Yes, but only if your loan balance drops to 80% of the home’s value. If you’ve put less than 20% down, mortgage insurance will remain unless the loan balance hits that threshold.

FAQ: How Long Does It Take to Recast My Mortgage?

Once you’ve made the lump sum payment, it typically takes 30-45 days for your servicer to recalculate your payment and apply the new amount. Be prepared for a bit of a wait, but it’s much quicker than refinancing.

Bottom Line

Recasting is a simple, cost-effective way to lower your monthly mortgage payments without refinancing. It’s especially helpful if you’ve got a large lump sum to apply toward your loan, whether it’s from the sale of your current home or another source. Make sure to check with your servicer to see if recasting is an option, and always confirm their policies before moving forward.

If you’ve got questions or want to see how recasting could work in your situation, reach out! There’s no need to navigate the homebuying process alone.

Rebecca Richardson, “The Mortgage Mentor,” is a nationally recognized mortgage advisor based in Charlotte, NC, lending in multiple states across the U.S. With over 20 years of experience, she helps buyers navigate home financing with confidence—whether you're buying your first home, investing, or navigating a major life transition. Rebecca is especially known for her work with veterans, real estate investors, and clients with complex financial needs. As a top-producing loan officer and sought-after educator, she’s a trusted guide for buyers and real estate professionals nationwide.