What is a mortgage recast
A recast lowers your monthly payment after you put a large amount toward your loan in one payment. Your interest rate and the date your loan ends stay the same.
01 How does a mortgage recast work
You make one big payment toward principal, which is the amount you still owe on the loan. Next, you ask the company that collects your payments, called your servicer, to figure your monthly payment again. It uses the smaller amount you now owe, your same rate and the months left to set a new, lower monthly payment. With most home loans, you and the servicer then sign a short agreement. These rules come from Fannie Mae, a big company that backs millions of home loans across the US and makes the rules they follow. A recast is not a loan modification. A modification changes the deal itself, such as your rate or end date.
A recast affects only the part of your payment that pays back the loan and its interest. Escrow, the part saved for property taxes and insurance, is handled on its own.
Put your own numbers into the mortgage recast calculator.
02 Worked example: recast, extra principal or make no change
Here you can see the three choices side by side for one loan. Extra principal means paying that money toward the loan without asking for a recast. To compare them, read across a row.
In this example the balance is $300,000 at 6.5% interest with 300 months to go, plus a $30,000 lump sum and a $250 recast fee:
| Option | Recast | Extra principal | Do nothing |
|---|---|---|---|
| Monthly payment | $1,823.06 | $2,025.62 | $2,025.62 |
| Paid off in | 25 years | 19 years 9 months | 25 years |
| Interest saved after the fee | $30,519 | $97,670 | $0 |
Amortization schedule in Excel gives you every payment in a spreadsheet, month by month.
03 What five big servicers charge for a recast
A minimum lump sum means the smallest one-time payment a servicer will take before agreeing to recast. At Bank of America, extra principal of $5,000 paid over the last six months counts, even when you split it into several payments. Truist asks for 10% of what you still owe on the loan.
| Servicer | Recast fee | Minimum lump sum |
|---|---|---|
 Bank of America | No fee | $5,000 over six months |
 Wells Fargo | No fee | $10,000 |
 Rocket Mortgage | $250 | $10,000 |
 PennyMac | $250 | $10,000 |
 Truist | $250 | 10% of the balance |
04 Mortgage recast pros and cons
Pros
- You get a lower monthly payment with no new loan, no credit check and no closing costs (the fees to set up a new loan).
- You keep the rate you have, which helps if rates today are higher than yours.
- The cost is low: $0 at Bank of America and Wells Fargo, $250 at Rocket Mortgage, PennyMac and Truist.
Cons
- Your money is tied up in your home. To get it back out, you would need to take a new loan.
- Your loan still ends on the same date, so you save less interest than if you just paid extra principal.
- FHA, VA and USDA loans, which US government agencies back, cannot be recast. Every servicer also sets its own minimum.
05 Should I recast my mortgage
Recast if a lower payment is your goal and your servicer allows it. Skip the recast if you want the loan paid off sooner, if you may need the cash in the next few years, or if a new loan at a lower rate (a refinance) would lower the payment even more. Check your own numbers or see how a recast compares with a refinance.
06 Questions that come up about a recast
Is it smart to do a mortgage recast?
A lump sum, a rate you like, and a desire for a lower payment without a new loan make a recast a good fit. If you would rather pay off the loan sooner, paying extra principal and skipping the recast saves more interest.
How many times can you recast a mortgage?
That depends on the servicer. Bank of America lets you recast at most once in any 12-month period. Rocket Mortgage says there is no limit on how many times you can recast.
Is paying down principal better than recasting?
Both choices use the same one-time payment. Paying extra toward principal without a recast keeps your payment the same, ends the loan sooner, and saves interest. A recast lowers the payment instead. Recast compared with extra payments