When you make a large extra principal payment ($10,000+), you can request the lender to 'recast' the loan — recalculate the monthly payment based on the new lower balance over the remaining term.

Recasting keeps your interest rate and loan term but reduces the monthly payment. It's much cheaper than refinancing — usually a flat fee of $200-$500 — and doesn't require a credit check or appraisal.

Recasting is available on most conventional loans but not FHA, VA, or USDA loans. It's useful when you receive a windfall (inheritance, bonus) and want to lower monthly cash flow without losing your low rate.