08/21/2026
How does recasting a mortgage differ from refinancing it? And why don’t more lenders talk about this option?
Recasting a mortgage is not the same thing as refinancing. Where recasting is permitted, the borrower makes a substantial payment toward loan principal, often in amounts of $5000 or higher. After that payment is made, the lender recalculates the entire loan based on the new, lower principal balance.
Recasting is an option for borrowers who have the cash, want the lower payments, and who don’t mind paying a fee which may run up to $300 or so. The fee is a standard part of doing business with this type of loan transaction.
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Do you need a lower mortgage rate or monthly payment? Applying to refinance your home loan can help if the interest rates offered to you at refinancing time are more competitive than under the original home loan. But is refinancing the only option?
