Mortgage Recast vs Refinance
Recast recalculates payments on your current loan after a lump sum. Refinance is a new loan — often for a new rate or term.
Published August 28, 2026
A recast keeps your current loan and recalculates a lower monthly payment after a large principal paydown. A refinance replaces the loan with a new one — often to change the rate, term, or cash out equity.
| Recast | Refinance | |
|---|---|---|
| What changes | Payment amount on same loan | New loan replaces old loan |
| Typical trigger | Large lump-sum principal payment | New rate, term, or cash out |
| Closing costs | Often a modest recast fee | Often thousands in closing costs |
| Rate | Stays the same | New market rate applies |
| Credit check | Usually not a full new application | New underwriting typically required |
| Modeled here | Not directly | Refinance calculator |
When recast might fit
You made a large principal payment — inheritance, home sale proceeds, or savings — and want lower monthly payments without giving up a low rate on the existing note. Conventional loans often allow recast; many FHA, VA, and USDA loans do not. Ask your servicer about eligibility and fees before you send the lump sum.
When refinance might fit
Market rates dropped, you want to shorten the term, or you need to change loan type. Use the refinance calculator and break-even guide to weigh monthly savings against closing costs and total interest.
Extra principal without either option
Paying extra principal still shortens the loan and saves interest even if you do not recast or refinance — your required payment usually stays the same until you formally request a recast or close a new loan. See lump-sum payments.
Common misunderstanding
A lump-sum payment does not automatically recast your loan. The balance drops and future interest falls, but the scheduled payment typically stays the same until you request a recast on an eligible loan.
Calculators for this topic
- Mortgage Refinance Calculator — Compare your current mortgage to a refinance option — see monthly savings, break-even point, and lifetime interest.
- Extra Mortgage Payment Calculator — See how much time and interest you could save by making extra payments on your mortgage.
- Amortization Calculator — View a full amortization schedule showing every payment, principal, interest, and remaining balance.
Frequently Asked Questions
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Educational information only — not financial, legal, or tax advice. Financial disclaimer.