Mortgage Recast vs Refinance
Have a lump sum? Compare recasting your mortgage against refinancing to see which option saves you more money.
Mortgage Recast
Keep Your RateRefinance
New Rate🔄 Recast
- Very low fee ($150-500)
- Keep your existing rate
- No credit check required
- No appraisal needed
- Quick process (1-2 weeks)
- No closing paperwork
- Requires large lump sum
- Doesn't lower interest rate
- Not all loans qualify
- FHA/VA loans excluded
- Term stays the same
✨ Refinance
- Can lower interest rate
- Can change loan term
- Access equity (cash-out)
- Works with any loan type
- Consolidate second mortgages
- Remove PMI potentially
- High closing costs (2-5%)
- Requires credit check
- Appraisal required
- 4-6 weeks to close
- More paperwork
- May restart 30-yr term
Mortgage Recast vs Refinance: Which Is Right for You?
If you have a lump sum of cash and want to lower your monthly mortgage payment, you have two main options: recasting your mortgage or refinancing. Each has distinct advantages depending on your current rate, how much cash you have available, and today's interest rate environment.
What Is a Mortgage Recast?
A mortgage recast (also called re-amortization) is when you make a large lump-sum payment toward your principal balance, and your lender recalculates your monthly payment based on the new, lower balance. Critically, your interest rate and loan term stay the same—only your payment drops.
Recasts typically cost just $150-500 as an administrative fee, making them far cheaper than refinancing. They're ideal when rates are high (or rising) and you want to keep your existing lower rate.
What Is a Mortgage Refinance?
A refinance replaces your entire mortgage with a brand new loan. This means you can get a different interest rate, change your loan term (e.g., from 30 years to 15 years), or access your home's equity through a cash-out refinance.
The downside? Refinancing involves full closing costs, typically 2-5% of your loan amount. On a $300,000 mortgage, that's $6,000-$15,000 in fees. You'll also need to qualify again with credit checks, income verification, and usually an appraisal.
When Should You Recast Instead of Refinance?
Recast is usually better when:
- Your current rate is competitive — If your rate is lower than (or similar to) today's rates, a recast lets you keep it
- You have a lump sum ready — From a bonus, inheritance, home sale, or savings
- You want minimal hassle — No credit check, no appraisal, no mountains of paperwork
- You just bought recently — If you financed a home purchase and got an inheritance or bonus shortly after
- You want certainty — Closing costs for refinancing can vary; recast fees are fixed and low
When Should You Refinance Instead of Recast?
Refinancing is usually better when:
- Rates have dropped significantly — At least 0.75-1% lower than your current rate
- You want to change your term — Shorten to 15 years for faster payoff, or extend to 30 for lower payments
- You need to access equity — Cash-out refinance for renovations, debt consolidation, etc.
- Your loan type doesn't allow recasting — FHA and VA loans typically cannot be recast
- You plan to stay long-term — Long enough to recoup closing costs (use our break-even calculation)
How to Use This Calculator
Enter your current loan details (balance, rate, payment, remaining term), your available lump sum, and the refinance terms you've been quoted. The calculator will show:
- New payment after recast — Based on your current rate with reduced balance
- New payment after refinance — Based on new rate with same term
- Total cost comparison — Including all interest and fees over the remaining term
- Break-even timeline — How long until each option's savings exceed its costs
- Decision guidance — Clear recommendation based on your numbers
Frequently Asked Questions
A mortgage recast is when you make a large lump-sum payment toward your principal and your lender recalculates your monthly payment based on the new, lower balance while keeping your same interest rate and term. A refinance replaces your entire mortgage with a new loan, potentially at a different rate and term, but involves closing costs typically ranging from 2-5% of the loan amount.
Recast if: you have a lump sum, your current rate is lower than or similar to today's rates, and you want lower payments with minimal fees ($150-500). Refinance if: today's rates are significantly lower than your current rate (typically 0.75%+ difference), you want to change your loan term, or you need to access equity. Use this calculator to compare total costs for your specific situation.
A mortgage recast typically costs between $150 and $500 as a one-time administrative fee charged by your lender. This is significantly less than refinancing closing costs, which typically range from $3,000 to $15,000 (2-5% of the loan amount). Most lenders require a minimum lump sum payment of $5,000-$10,000 to qualify for a recast.
Most lenders require a minimum lump sum payment of $5,000 to $10,000 to process a mortgage recast. Some lenders may require $10,000 or more. Check with your specific lender as requirements vary. Note that not all loan types are eligible for recasting—FHA and VA loans typically cannot be recast.
Refinancing is typically better when: 1) Current rates are at least 0.75-1% lower than your existing rate, 2) You plan to stay in your home long enough to recoup closing costs (usually 2-5 years), 3) You want to shorten your loan term (e.g., 30-year to 15-year), or 4) You need to access home equity through a cash-out refinance.
Yes, you can typically recast a mortgage after refinancing, as long as your new loan is a conventional loan that allows recasting. However, most lenders require you to wait a certain period (often 3-6 months) after closing before you can recast. FHA and VA loans generally cannot be recast regardless of when you refinanced.