Recast vs. Refinance

You have a lump sum. Recasting keeps your rate and re-amortizes for a small fee. Refinancing resets rate and term but costs thousands in closing. Run both side by side — we’ll raise an eyebrow at the expensive one.

1 · Current mortgage

Current payment: $2,341.90/mo (P&I)

2 · Recast option

Same 6.875% rate, same 26y term — smaller balance, smaller payment.

3 · Refinance option

Recast Ledger
New balance$300,000
New payment$2,066.39/mo
Payment drops by$275.52
Term26y (unchanged)
Rate6.875% (unchanged)
Cash needed$40,250
Remaining interest$344,713
Total cost (interest + fees)$344,963
Refinance Ledger
Lower cost
New balance$306,500 (incl. closing)
New payment$1,788.65/mo
Payment drops by$553.25
Term30y (resets)
Rate5.75%
Cash needed$40,000
Remaining interest$337,414
Total cost (interest + fees)$343,914
VerdictRefinancing costs $1,048 less over the life of the loan. Refi breaks even on closing costs in ~23 months — stay shorter and recast wins.

P&I only. Compares total remaining interest plus fees on each path; refinancing to a longer term lowers the payment but can raise lifetime interest — the total-cost line catches this. Recast availability varies by lender and loan type (most government-backed loans can't be recast). Not financial advice — verify numbers with your lender.

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The verdict above hinges on the 5.75% refi rate — real offers vary by credit and equity. Check actual quotes before deciding.
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The choice lenders rarely volunteer

A recast is the quiet option: a few hundred dollars, same rate, same payoff date, lower payment — but only some loans allow it, and most government-backed loans do not. A refinance resets everything and costs thousands up front, which only pays off if the rate drop is big enough and you stay long enough. The verdict above does that math instead of guessing.