Refinance vs. recast
Scenario. A $320,000 balance with about 25 years left. Refinance: current rate 7.5%, new rate 6.76%, ~$6,000 in closing costs. Recast: apply a $50,000 lump sum and re-amortize at the existing rate for a small servicer fee (often $150–$500).
| Refinance the loan | Recast after a lump sum | |
|---|---|---|
| Changes your interest rate? | Yes — that's the point | No — same rate |
| Upfront cost | $6,000 | ~$150–$500 fee |
| Lowers the monthly payment? | $152/mo | Yes, proportional to the lump sum |
| Requires a full application / appraisal? | Yes | No |
| Best when | Your rate is well above market | Your rate is fine and you have a lump sum |
Run “Refinance the loan” → · Run “Recast after a lump sum” →
Two different tools
A refinance replaces your loan entirely — new rate, new term, new closing costs, a fresh application and appraisal. It is the only option that lowers your rate. A recast keeps your existing loan and rate; after you make a large principal payment, the servicer re-amortizes the smaller balance over the remaining term, so the monthly payment drops. It costs a few hundred dollars, not a few thousand.
Which one, when
- Refinance if your current rate is meaningfully above today's market and you will hold the loan past the break-even month.
- Recast if your rate is already competitive, you have come into a lump sum, and you want a lower required payment without paying to redo the loan.
- You can do both in sequence: refinance to a better rate, then recast later if you make a large principal payment and want the payment reduced.
Frequently asked questions
What is a mortgage recast?
Is recasting better than refinancing?
Can I recast any mortgage?
Related calculators
Terms: Refinance , Mortgage recast , Closing costs , Amortization , Principal