How Mortgage Recasting Works: Step by Step

A mortgage recast is the cheapest way to permanently lower your monthly payment without touching your interest rate or your payoff date. You send your servicer a lump-sum principal payment, pay a small fee, and the servicer recalculates your payment on the smaller balance. This guide walks through what a recast actually is, the exact six-step request process, how long it takes at real servicers, who qualifies, and a sample request letter you can copy.

What is a mortgage recast?

A recast, formally a re-amortization, has two parts. First, you make a substantial lump-sum principal payment, which servicers call a principal curtailment. Second, the servicer recalculates your monthly principal and interest by amortizing the new, lower unpaid balance over the same remaining term at the same interest rate. Your payment drops. Your rate and maturity date do not move.

This is not an informal favor; it is standard servicing machinery. Fannie Mae Servicing Guide C-1.2-01, Processing Additional Principal Payments requires servicers to accept and apply borrower-designated principal curtailments on current loans, and it spells out the re-amortization process: the servicer completes Form 181, the Agreement for Modification, Re-Amortization, or Extension of a Mortgage, gives you a copy, and must not classify the re-amortization as a loan modification. Freddie Mac has parallel rules on the application of payments and curtailments in Seller/Servicer Guide section 8103.3, and its investor-reporting materials define a P&I recast as the payment recalculation a servicer may approve after a curtailment.

Because it is not a new loan and not a modification, there is no appraisal, no credit check, and no underwriting. That is why the typical cost is a flat $150-$500 fee instead of the 2-6% closing costs of a refinance. We compare the two options in detail in recast vs refinance.

How to recast your mortgage: the six-step process

Step 1: Confirm eligibility by phone

Call your servicer before anything else. Recasting is servicer and investor policy, not a right, and not every company offers it. Ask three questions: does my loan type qualify, is my account in good standing, and do you offer recasts at all. Conventional loans backed by Fannie Mae or Freddie Mac generally qualify; FHA, VA, and USDA loans generally do not. Our page on which lenders allow recasting summarizes published policies, but a phone confirmation is the only answer that counts.

Step 2: Confirm the minimum and the fee

Minimums are commonly $5,000-$10,000, but they range from no minimum at Chase to 10% of the unpaid principal balance at Truist and Newrez. Fees are typically $150-$500, often around $250. Wells Fargo and Bank of America both state a $0 recast fee, and Chase publishes no fee while also disclaiming that fees may apply. Where a servicer has not published its minimum or fee, we say so on our lender pages; call and get the number in writing. Full details are in our mortgage recast fees guide.

Step 3: Submit the request form or letter

Most servicers want a written request: either their own recast request form or a simple letter like the sample below. Order matters at some companies. Mr. Cooper, for example, tells borrowers to submit the recast request form before making the lump-sum payment; paying first delays processing, and making the payment does not guarantee approval. Ask your servicer whether the form or the money comes first.

Step 4: Send the lump sum marked principal-only

Send the funds by the method your servicer specifies and explicitly designate the payment as principal-only. An undesignated payment can be applied to future scheduled payments or escrow instead of curtailing the balance, which defeats the recast. Fannie Mae's rule in C-1.2-01 turns on the payment being identified by the borrower as an additional principal payment, so the label is not a formality.

Step 5: Sign the re-amortization agreement

The servicer recalculates your payment and sends an agreement showing the new principal and interest amount. On Fannie Mae loans this is documented on Form 181. Bank of America, for instance, cannot quote the new payment in advance; you receive the agreement, see the number, and can sign or decline. Read it, confirm the rate and maturity date are unchanged, and return it.

Step 6: The new payment takes effect

Your servicer confirms the effective date, usually the first of an upcoming month. Until that date, keep making your current payment in full and on time. A missed or short payment during processing can make the loan delinquent and cancel the recast. If you use autopay, confirm the drafted amount updates automatically.

How long does a mortgage recast take?

Expect 30 to 60 days from request to new payment at most servicers, and up to 90 days at some, with real spread on both ends. Published and verified timelines:

Many servicers, including Chase, Rocket Mortgage, and Bank of America, publish no processing time at all. Third-party guides often quote 45 to 60 days for those, which is a workable planning assumption but is not the servicer's own figure. If timing matters, for example you are recasting after selling a previous home, ask for the expected effective date when you submit the request and get it in writing.

Who is eligible for a recast?

• Loan type: conventional loans, including Fannie Mae and Freddie Mac conforming loans and many jumbo or portfolio loans, can generally be recast. FHA, VA, and USDA loans generally cannot; their program rules include no voluntary re-amortization, so the path to a lower payment on those loans is a streamline-type refinance instead.
• Payment history: the loan must be current. Lenders typically want a record of on-time payments first, often two to six months of seasoning before a recast request, per Bankrate. Bank of America, for example, requires the first six months of payments to have been made.
• Lien position and status: first liens only at most servicers, no active bankruptcy, and investor approval governs. Fannie Mae's reapplication rules also depend on how the loan is pooled, which is one reason availability varies by servicer.

A worked example in dollars

Say you owe $300,000 at 6.5% with 25 years remaining, paying about $2,026 a month in principal and interest. You apply a $50,000 lump sum and recast with a $250 fee:

• New payment: about $1,688, so you keep roughly $338 every month.
• Interest saved: about $51,000 over the remaining life of the loan, net of the $250 fee.
• Rate and payoff date: unchanged. You still finish in 25 years, at 6.5%, just cheaper each month.

Whether that trade beats putting the same $50,000 toward extra principal without a recast, which keeps the payment at $2,026 but ends the loan years early, depends on whether you want monthly cash flow or maximum interest savings. We break that decision down in recast vs extra payments and is recasting worth it.

Sample recast request letter

If your servicer accepts a written request instead of, or alongside, its own form, this letter covers everything they need and asks the right questions before your money moves. Download the letter as a .txt file or copy it below and replace the bracketed placeholders.

[Date]

[Servicer Name]
Attn: Recast / Payment Processing Department
[Servicer Mailing Address]

Re: Request for loan re-amortization (mortgage recast)
Borrower name: [Your Full Legal Name]
Loan number: [Your Loan Number]
Property address: [Property Address]

To Whom It May Concern:

I am writing to request a re-amortization (recast) of the above-referenced
mortgage loan under your standard recast process.

I intend to make a lump-sum principal payment of $[Amount], to be applied as a
principal curtailment, and I request that you recalculate my monthly principal
and interest payment by amortizing the new unpaid principal balance over the
remaining term of the loan at my existing interest rate. I understand that the
interest rate and maturity date of the loan will not change.

Please confirm the following in writing before I send funds:

1. That my loan is eligible for a recast and any minimum lump-sum requirement.
2. The recast fee, if any, and how it should be paid.
3. Any form or agreement I must complete, and whether it must be submitted
   before the principal payment is made.
4. The exact payment instructions so the funds are applied to principal only.
5. The expected processing time, and the date the new payment would take
   effect, including any monthly cutoff date that affects it.

After the recast is processed, please send me written confirmation of my new
monthly principal and interest payment and the date it takes effect. I will
continue making my current scheduled payments until the new payment amount is
in effect.

I can be reached at [Phone Number] or [Email Address] if you need anything
further to process this request.

Sincerely,


[Signature]
[Printed Name]
[Phone Number]
[Email Address]

One warning about the word "recast"

In federal mortgage rules, "recast" can mean something very different from what this page describes. Under Regulation Z, 12 CFR 1026.43, a recast is the moment an adjustable-rate introductory period, an interest-only period, or a negative-amortization period ends and the payment resets to fully amortizing, which typically makes the payment go up. The CFPB's CHARM booklet on adjustable-rate mortgages uses the term the same way. A voluntary lump-sum recast, the subject of this guide, is the opposite: you choose it, and the payment goes down. If you see "recast" in your ARM loan documents, read the context carefully before assuming it means a payment reduction.