Recast: Lower Your Payment Without Refinancing
Here is a tool almost no one talks about. If you come into a lump sum — a bonus, an inheritance, the proceeds of a sale — and you want a lower payment but you have a rate worth keeping, a recast may be exactly right.
How a recast works
You make a large payment toward principal, and the lender re-amortizes the loan over its remaining term at the same rate. Your balance is smaller, so your monthly payment drops — but your interest rate and payoff date stay the same. There is usually only a small fee, and no full refinance, no new appraisal, no closing costs.
Recast versus refinance
| Recast | Refinance | |
|---|---|---|
| Changes your rate? | No | Yes |
| Lowers the payment? | Yes | Possibly |
| Requires a big principal payment? | Yes | No |
| Closing costs? | Minimal fee | Full costs |
| Best when | You have a lump sum and a rate worth keeping | You want a different rate or term |
If you hold a low rate and want a lower payment, a recast is often the smartest move in the whole book — you lower the payment without surrendering the rate. Ask whether your loan is eligible; most conventional loans are.