How much does a mortgage recast cost?

The fee itself

Servicers charge a flat administrative fee to re-amortize your loan, commonly somewhere between $150 and $500. Some waive it. It is a single charge, not a rate change and not an ongoing cost.

What you are not paying, because no new loan is created:

• No closing costs
• No appraisal
• No origination fee
• No credit check, and therefore no hard inquiry on your credit file
• No title work

That short list is the whole reason a recast is cheap. A refinance has to create a new mortgage, and every item above comes with it. A recast just recalculates the one you already have.

Fees are not standardised. They vary by servicer and are not published consistently, so treat any figure you read online — including this one — as a range to verify rather than a quote. Ask your servicer for their exact fee and their exact minimum before you send a cent.

The fee pays for itself almost immediately

Because a recast lowers your required monthly payment, the fee has a payback period you can actually calculate. Here it is on a $400,000 balance at 6.5% with 25 years remaining, against a $250 fee:

Even at the smallest realistic lump sum the fee is gone within a third of a year. Anyone deciding against a recast because of the fee is deciding on the wrong number.

Recast fee vs refinance closing costs

This is where the difference stops being a rounding error. Refinancing commonly costs 2% to 5% of the loan amount:

On a $400,000 loan a refinance can cost forty times what a recast costs. That gap is the strongest argument for recasting when your rate is already competitive — and it explains why plenty of borrowers refinance into a worse rate, paying thousands, to solve a payment problem a few hundred dollars would have solved.

The honest counterweight: only a refinance can change your interest rate. If market rates are meaningfully below yours, the rate saving usually dwarfs the closing costs and a recast cannot compete.

The minimum lump sum

Separate from the fee, and often the bigger obstacle. Servicers typically require a minimum of around $5,000 to $10,000, and some express it as a percentage of the balance instead of a flat figure.

Two other eligibility rules worth confirming in the same phone call, because they decide everything else:

• Loan type. Recasting is generally available on conventional loans and generally not on FHA, VA or USDA loans. Some jumbo and portfolio loans are excluded too.
• Servicer policy. No lender is obliged to offer recasting at all. Some simply do not.

The real cost, which is not the fee

Here is the part the lender pages skip. The $250 is trivial. The meaningful cost of a recast is that it captures only part of what your lump sum could have produced.

Same $50,000, same $400,000 balance at 6.5% with 25 years left, three different uses:

Read the first two rows against each other. The same $50,000, applied to the same mortgage on the same day, saves three times more interest when you do not recast. That is not a flaw in recasting — it is what recasting is. You are converting part of the benefit into monthly cash flow instead of an earlier payoff, and that conversion has a price.

So the correct question is not "can I afford the $250". It is "is $337.60 a month, every month, worth about $101,000 of foregone interest saving to me?" For a household with variable income, a new childcare bill, or a job that might not last, the answer is often yes. For one that is comfortable and simply wants to be mortgage-free sooner, it is usually no.

The third row is included for honesty, not as a recommendation: it is not comparable in risk. Paying down a 6.5% mortgage is a guaranteed, risk-free saving; a 6% market return is neither guaranteed nor tax-free. But it is the real alternative use of the money, and leaving it out of the picture would be the same selective arithmetic this page exists to correct.

The middle path most people miss

You can recast and keep paying the old amount. The recast lowers what you are required to pay; nothing stops you paying more. Do that and you get the safety net of a lower obligation plus most of the interest saving of the extra-principal route.

It only works if you actually keep paying it. The whole point of a recast is that the lower payment is now permitted, and permitted things tend to happen.

Before you commit: the five-question call

1. Does my loan type qualify for a recast?
2. What is your exact fee?
3. What is your exact minimum lump sum?
4. Will the payment be applied as a principal reduction, and is the recast a separate request I need to make in writing?
5. How many billing cycles until the new payment starts?

Question 4 is the one that catches people. Sending the lump sum and not requesting the recast leaves you with a smaller balance and the same payment — a fine outcome, but not the one you were trying to buy.

Frequently asked questions