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.

How to use it: enter your mortgage, your lump sum, and a real refi quote — both paths run side by side and the cheaper one gets the nod.

Example numbers so you can see how it works — swap in yours.

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

New rate
New term
Recast Math
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 Math
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.

Sponsored · mortgage refinance
The verdict above hinges on the 5.75% refi rate — real offers vary by credit and equity. Check actual quotes before deciding.

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.

Recasting shines in one specific situation: your existing rate is lower than what a refinance would get you today, and what you want from the windfall is a smaller required payment. The lender takes your lump sum, re-runs the amortization on the smaller balance over the months you already had, and charges a processing fee that's typically a few hundred dollars — no appraisal, no closing, no credit pull, no rate roulette. Your below-market rate survives untouched, which is exactly why nobody upstream is eager to suggest it.

The eligibility fine print: FHA, VA, and USDA loans generally can't be recast at all, and lenders that do allow it usually want a meaningful minimum principal payment (often $5,000–$10,000) and a loan that's current. Conventional conforming loans are the usual candidates. One phone call to your servicer — "do you offer recasting, what's the fee, what's the minimum" — settles it in five minutes.

And there's a third door the comparison above doesn't need a button for: just pay the lump sum toward principal and don't recast. Your required payment stays the same, so instead of payment relief you get a shorter loan and less lifetime interest — often the cheapest outcome of the three if cash flow isn't the problem you're solving. Our mortgage payoff calculator shows exactly what that version buys. Refinancing earns its closing costs only when the rate drop is large and your stay is long — which is precisely what the break-even line in the verdict is checking.