Mortgage Recast
FinancingA mortgage recast (or re-amortization) lowers your monthly payment after you make a large lump-sum payment toward principal. The lender re-runs the amortization formula on the new, smaller balance — over the same remaining term and at the same interest rate — so only the monthly payment changes. It drops. The cost is a processing fee, typically $150–$400: no new loan, no appraisal, no credit check, no closing costs.
The key thing it fixes: extra principal payments alone do not lower your required monthly payment — they shorten the loan instead. Only a recast recalculates the payment down. It’s a cash-flow tool, not a payoff accelerator (keeping the higher payment saves more total interest).
Generally available on conventional (Fannie/Freddie) loans; FHA, VA, and USDA loans don’t qualify. You must be current, and lenders set a minimum lump sum (often ~$5,000–$10,000). Because most US homeowners hold sub-5% rates that refinancing would destroy, a recast is often the only way to lower the payment without giving up the rate.
Full mechanics and comparison tables: mortgage recast. For the higher-risk variable-rate alternative, see first-lien HELOC & velocity banking.