Recasting Your Mortgage on Long Island: Is It Worth It?

A recast lets you put a lump sum toward your mortgage, keep your rate and lower your monthly payment, without refinancing.

I’ve been getting a lot of questions about recasting lately. Here’s how it works on a conventional loan, and what’s different on Long Island.

What is a mortgage recast?

A mortgage recast is when you pay a lump sum toward your principal and your mortgage company refigures the payment on the lower balance. Your rate and payoff date stay the same, so your principal and interest goes down. It’s usually for conventional loans, and your servicer (the company you pay) has to agree.

It’s a request, not a right. The standard New York mortgage note says extra principal doesn’t lower your payment unless the owner of your loan agrees in writing. Without a recast, a lump sum just pays the loan off sooner.

How much does a recast lower your payment?

Whatever share of your balance you pay off, your principal and interest drops by that same share. That’s exact on a fixed-rate loan paid on schedule.

Owe $600,000 and put $100,000 toward it? That’s one-sixth of the balance, so principal and interest drops by one-sixth. Your rate changes the dollar amount, not the share, so the calculator below asks for your own rate.

Here’s the Long Island catch. A recast doesn’t touch the taxes and insurance in your escrow. In Nassau and Suffolk, property tax is often the biggest piece of the payment after principal and interest.

If taxes and insurance are a quarter of your bill, a one-sixth cut to principal and interest is an eighth of the total.

Recast vs refinance: which is better on Long Island?

If you like your rate and just want a lower payment, a recast is simpler. To change your rate or term, you’d refinance.

A refinance replaces your loan with a new one. On Long Island, that means a full closing, with title fees, attorney fees and often an appraisal. Here’s how long a refinance takes.

A recast isn’t a new loan, so there’s no refinance closing. Your servicer will tell you if there’s a fee or a document to sign.

Recast vs paying extra: which saves more?

Paying extra and keeping your old payment saves more interest. A recast saves less, but it lowers the payment you’re required to make.

In three sample loans, keeping the old payment saved two and a half to three times as much interest as recasting. The amortization schedule in my mortgage calculator shows what extra payments save.

Is a recast worth it? It is if you want a lower required payment and like your rate. If saving the most interest matters more, paying extra wins.

Can’t decide? Recast, then keep sending your old payment, with the extra marked for principal. You land in the same place, minus the fee, with a lower payment to fall back on.

How much does it cost to recast a mortgage?

Many servicers want a lump sum of at least $10,000 or 10% of your balance. The fee is usually a few hundred dollars, and some servicers charge nothing. New York makes servicers post their standard fees online, so check your servicer’s site or call.

Conventional loans are the usual fit, and the loan has to be current. Most servicers won’t recast FHA, VA or USDA loans.

How to recast your mortgage, and how long it takes

Most servicers take a few weeks, and a few take up to two or three months. Keep paying your old payment until the new one starts.

I can’t do the recast for you. Your servicer handles it, and if your loan was transferred, that’s the new company.

1. Call your servicer. Ask if your loan qualifies, what the minimum, fee and timing are, and whether they want your request or the money first.
2. Send the funds the way they ask. Some want a wire or certified funds, and a personal check can slow things down.
3. Check the new payment, then sign. Some servicers need every borrower to sign, sometimes in front of a notary.

When does a recast make sense on Long Island?

• You sold your old house after buying the new one. Put the proceeds toward the new mortgage and ask for a recast. If a bridge loan helped you buy first, the sale pays it off before the recast.
• A bonus, an inheritance or savings came in. A recast puts it into the house and still lowers your monthly bill.
• You like your rate. A recast keeps it, so you don’t have to refinance to get a lower payment.

Nassau and Suffolk home prices have climbed, which can mean more sale money. OneKey MLS has Nassau’s September single-family median at $749,500 in 2023 and $860,000 in 2026, up about 15%. Suffolk’s went from $615,000 to $740,000, up about 20%.

Buying before you sell? I arrange purchase loans through lenders I work with. Ask before you close whether the new loan allows a recast and how soon.

Mortgage recast calculator: use your own rate

See how much a lump sum lowers your principal and interest. Grab your latest mortgage statement.

Frequently asked questions