Mortgage Recast vs Refi Calculator

A mortgage recast (re-amortization) lowers your monthly payment by applying a lump-sum principal payment and recalculating the loan over the original remaining term, KEEPING the original interest rate. Refinance pays off the loan with a new one at current market rate. For borrowers with sub-4% pre-2022 rates, recast is almost always better than refinance when interest rates are high.

When to Recast

Recast wins when you have: (1) a low locked-in rate (sub-5%) you do not want to lose, (2) a lump sum of $50k+ to apply, (3) want to keep cash flow flexible with lower payments. Recast costs only $200-500 in fees and takes 2 weeks. Most banks require minimum $5,000 lump sum and one-time fee. FHA and VA loans typically do NOT permit recast.

When to Refinance Instead

Refinance wins when: (1) market rates are lower than current rate by 1%+, (2) you want to switch term (30yr to 15yr), (3) you want to change loan type (ARM to fixed), (4) you want cash-out beyond just lump-sum lowering payment. Refi costs 2-3% of loan in closing costs and requires full underwriting (credit, DTI, appraisal).

How Recast Works Mechanically

You make a one-time lump-sum principal payment, then the lender re-amortizes the remaining balance over the original remaining term at the original rate. Same payoff date, lower payment. Example: $320k balance at 3.25% with 24yr left = $1,857/mo. Pay $75k, balance drops to $245k, new payment = $1,422 — saves $435/mo for 24 years.

Last updated May 2026. Sources: CFPB Mortgage Rules, Fannie Mae Selling Guide.