Mortgage Recast vs Extra Principal Payment Calculator
After a big lump sum, you have two choices: recast (re-amortize at lower payment) or apply as extra principal (keep payment, shorten loan). Each has different cash flow and interest implications.
| Current monthly payment | — |
| After recast: new monthly payment | — |
| After recast: years to payoff | — |
| After recast: total interest | — |
| Extra-principal: monthly payment (unchanged) | — |
| Extra-principal: new years to payoff | — |
| Extra-principal: total interest | — |
| Interest difference (recast vs extra) | — |
When you receive a windfall (bonus, inheritance, sale proceeds), you can either recast your mortgage (apply as lump sum + re-amortize at a lower monthly payment over the same remaining term) or apply it as extra principal (keep the same monthly payment, shorten the payoff time). Both save interest. The right choice depends on whether you value cash flow relief or maximum interest savings.
Recast: Lower Payment, Same Term
Recasting applies your lump sum to the principal balance and re-amortizes the loan over the original remaining term. Your monthly payment drops permanently. Cost: a one-time recast fee, typically $250-$500. Benefits: improved monthly cash flow, lower DTI ratio (helpful if you plan another loan application), and you don't have to refinance — same rate, same lender, no closing costs. Drawback: you save less total interest than extra-principal because you stretch payments over the full remaining term.
Extra Principal: Same Payment, Shorter Term
Applying the lump sum as extra principal keeps your monthly payment unchanged but accelerates payoff. Because you continue paying the original amount (now mostly principal), you finish the loan years earlier and save much more total interest. Best for borrowers with comfortable cash flow who want to be debt-free faster. Drawback: no cash flow relief — your monthly obligation stays the same. For most disciplined homeowners with stable income, extra-principal is the financial winner. Recast wins when cash flow flexibility matters more than maximum interest savings.
Last updated May 2026. Sources: CFPB Mortgage Guide.