Mortgage Recasting vs Refinance vs Extra Payment Calculator
Compare three mortgage payoff strategies side by side: recasting (re-amortize), refinancing (new rate/term), and extra principal payment (no fees). See monthly payment, total interest, and payoff time for each. Free, private.
| Metric | Recast | Refinance | Extra Payment |
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Recasting, refinancing, extra payment — three paths to lower mortgage cost
When you receive a windfall (inheritance, bonus, asset sale) and want to put it toward your mortgage, you have three options: recast, refinance, or apply it as an extra principal payment. Each has different cash flow, fee, and total interest implications. There is no universally right answer — it depends on current rates vs your existing rate, your cash flow needs, and how long you plan to stay in the home.
This calculator runs all three scenarios side by side using your actual numbers and shows you the winner for both monthly cash flow and total interest savings. Most homeowners look at recast OR refinance, not all three — but the extra payment option often wins for total interest reduction.
Option 1: Recasting — same rate, lower payment
Mortgage recasting (or re-amortization) is when you make a large lump-sum principal payment to your existing mortgage, and the lender recalculates the monthly payment based on the new lower balance, keeping the original interest rate and remaining term. The benefit: lower monthly payment without refinancing. Typical recast fee: $200-$500, no appraisal, no credit check.
Example: $400,000 balance, 6.5%, 27 years remaining. Monthly P&I = $2,549. Apply $50,000 lump sum and recast: new balance $350,000, payment recalculated over 27 years at 6.5% = $2,234. Monthly savings: $315. Total interest saved over the remaining 27 years: roughly $80,000.
Recasting is best when: (1) current rates are higher than your existing rate (refinancing would make things worse), (2) you want lower cash flow burden, (3) you have a windfall but don't want to liquidate it all into the home, (4) you're with a lender that explicitly allows recasting (most conventional Fannie/Freddie; not FHA or VA).
Option 2: Refinancing — new rate, new term
Refinancing replaces your existing mortgage with a new one — potentially at a different rate, term, and lender. Closing costs run $3,000-$8,000. Refinancing makes sense when current rates are at least 0.75-1.0% below your existing rate, the savings exceed the closing costs within 2-3 years (the breakeven), and you plan to stay in the home longer than the breakeven period.
Example: same $400k loan at 6.5% with $50,000 cash. Apply the cash as down payment on a refinance to $350k at 5.5% with $5,500 closing costs. New 30-year payment = $1,987 (saving $562/month vs current $2,549). Over 30 years, total interest is $365,260 vs $429,520 — saves $64,260 BUT extends the loan back to 30 years (vs 27 remaining), so you pay interest for 3 extra years. Net interest savings: closer to $25,000-$40,000 depending on term choice.
Option 3: Extra principal payment — same payment, faster payoff
An extra principal payment applies the lump sum directly to the balance without changing the loan terms. The monthly payment stays the same, but you pay off years earlier. This is the simplest option — no fee, no paperwork, no lender approval needed (just mark the check "Apply to Principal").
Example: $400k at 6.5%, 27 years remaining, $2,549 monthly payment. Apply $50,000 as extra principal. Loan pays off in about 20 years (vs original 27). Total interest saved: roughly $135,000. This is the best total interest outcome because the loan term shortens dramatically.
Extra payments are best when: (1) you have cash flow capacity for the current payment, (2) you want the absolute lowest total interest, (3) you value being mortgage-free faster, (4) you don't need the monthly cash flow relief.
How to use this calculator
Enter your current loan balance, rate, and years remaining. Enter the lump sum you have available. Enter a hypothetical refinance rate (check current rates at bankrate.com or your bank), refinance closing costs ($3,000-$8,000 typical), and refinance term. Enter the recast fee your lender charges.
The calculator computes all three scenarios: (1) monthly payment after recasting, (2) monthly payment after refinancing (net of closing costs), (3) new payoff date if you apply as extra principal. The winner depends on whether you optimize for monthly savings (refinance + recast tied, depending on rates) or total interest savings (extra payment usually wins by $30k-$100k).
Source: CFPB Consumer Mortgage Guide, Fannie Mae Selling Guide B-7-2 (Mortgage Recast), Freddie Mac Single-Family Seller Servicer Guide — updated May 2026.