Compare Your Recast and Refinance Options
Enter your current mortgage details, the lump sum you plan to apply, and your refinance scenario. The calculator computes both side by side so you can make the right call.
Current Mortgage
Refinance Scenario
How to Use This Calculator
This calculator evaluates two completely different ways to use a lump sum of money to improve your mortgage situation. To get accurate results, you need data from your current mortgage and a refinance quote from a lender. Here is how to fill in each section.
Current Balance. Your outstanding principal balance as of today. Get this from your servicer's website or your most recent statement. Use the exact payoff figure if possible, as accrued interest can add a small amount above the statement balance.
Current Rate. The annual interest rate on your existing loan. Find this on your mortgage note or monthly statement. This is the rate you're keeping if you choose the recast option.
Remaining Term. The number of months left until your current mortgage is paid off. A 30-year loan originated 5 years ago has 300 months remaining. A 20-year loan originated 8 years ago has 144 months remaining.
Lump Sum to Apply. The amount of money you're considering putting toward principal. This is the amount that would be applied in either scenario — as a recast payment in the first case, or as a comparison figure for the refinance alternative. Common sources include inheritance, bonus income, proceeds from selling an asset, or savings accumulated for this purpose. Note that most servicers require a minimum lump sum of $10,000 to $20,000 to request a recast.
Refinance Rate. The interest rate you've been quoted for a refinance. Get an actual lender quote for this rather than using a hypothetical rate — the difference between an assumed rate and your actual qualifying rate can dramatically change which option wins.
Refinance Term. The loan term you'd choose if you refinanced. In a recast, your term stays the same as your current remaining term. In a refinance, you're starting a new loan and can choose a new term. This choice significantly affects both the monthly payment comparison and the total interest cost.
Refinance Closing Costs. The estimated total closing costs for the refinance. Use an actual Loan Estimate if you have one, or the Closing Cost Calculator to estimate. Typical range is 2%–5% of the loan balance, though this varies by lender, loan size, and location.
What Is a Mortgage Recast?
A recast — also called re-amortization or reamortization — is a little-known mortgage option where you make a large lump-sum payment toward your principal balance and then ask your mortgage servicer to recalculate (recast) your monthly payment based on the new, lower balance. Your interest rate stays exactly the same. Your remaining loan term stays exactly the same. Only your monthly payment changes — it goes down to reflect the reduced balance spread over the same remaining number of months.
Unlike refinancing, a recast does not create a new loan. There is no new application, no credit check, no income verification, no appraisal, and no title work. The administrative process is straightforward: you make the lump-sum payment, submit a written recast request to your servicer, pay a nominal fee (typically $150 to $500), and your servicer recalculates and confirms your new payment — usually within a few business days to a few weeks.
The catch: Not all servicers offer recasting, and those that do typically require a minimum lump-sum payment of $10,000 to $20,000 before they will process a recast request. Government-backed loans — FHA, VA, and USDA — generally do not permit recasting. Conventional loans (conforming and non-conforming) are the most likely to be recast-eligible. Call your servicer first to confirm availability and their minimum requirements.
How Recast and Refinance Differ
| Feature | Recast | Refinance |
|---|---|---|
| Upfront Cost | $150–$500 fee + lump sum | 2%–5% closing costs |
| Credit Check | No | Yes |
| Appraisal | No | Usually yes |
| Interest Rate Change | No (same rate) | Yes (new rate) |
| Term Change | No (same remaining term) | Yes (choose new term) |
| Processing Time | Days to weeks | 30–45 days |
| Lender Change Option | No | Yes |
How It's Calculated
The recast calculation is straightforward: subtract the lump sum from your current balance to get the new recast balance, then apply your existing interest rate and remaining term to the amortization formula to find the new monthly payment.
Recast Payment = Recast Balance × [r(1+r)^n] ÷ [(1+r)^n − 1]
Refinance Payment = Current Balance × [r_new(1+r_new)^n_new] ÷ [(1+r_new)^n_new − 1]
Where r = current monthly rate, n = remaining months, r_new = new rate, n_new = new term in months
The refinance calculation uses your current balance (not reduced by the lump sum, since in a refinance the lump sum would remain as savings), the new quoted rate, and the new term you select. The total cost of each option includes total interest remaining plus any upfront costs — recast fee for the recast option, closing costs for the refinance.
Real-World Example
Rebecca's Inheritance Decision
Rebecca inherited $75,000 and wants to use it to reduce her housing costs. Her current mortgage: $280,000 balance, 6.50% rate, 24 years (288 months) remaining. Current payment: $2,040/mo.
Option A — Recast: Apply $75,000 to principal → new balance $205,000. Same 6.50% rate, same 288 months remaining.
New recast payment: $1,494/mo
Monthly savings: $546/mo
Total remaining interest at 6.50% on $205,000 for 288 months: ~$225,600
Upfront cost: $250 recast fee
Option B — Refinance: Keep full $280,000 balance (or pay $75K down at closing to reduce balance to $205K — but for comparison, refinance the existing $280K). New rate: 6.00% for a 20-year term. Closing costs: $7,000.
New refinance payment: $2,005/mo
Monthly savings vs current: $35/mo
Total interest at 6.00% on $280,000 for 240 months: ~$186,100. Plus $7,000 closing costs = $193,100 total cost.
Break-even: $7,000 ÷ $35 = 200 months (over 16 years — essentially the full loan term)
Verdict: In this scenario, the recast wins dramatically. Rebecca's $75,000 lump sum has enormous impact because it reduces a $280,000 principal by 26.8% — saving $546/month immediately with minimal cost. The refinance offers almost no monthly benefit here because rates haven't dropped enough relative to her current 6.50% rate to produce meaningful savings on the full balance. The lump sum does far more work as a recast than as a scenario where she refinances without applying the funds to principal.
When Recast Wins
The recast option makes the most sense in a specific set of circumstances. Understanding when the recast wins helps you avoid the mistake of reflexively choosing a refinance just because it feels more familiar.
You already have a competitive interest rate. If your current rate is at or near market levels, there is little benefit to refinancing. The rate on the new loan won't be materially better than what you already have, so the primary tool available to reduce your payment is reducing your balance — which is exactly what a recast does.
You have a substantial lump sum available. The recast is most powerful when the lump sum represents a significant fraction of your remaining balance. Applying $75,000 to a $280,000 balance (27% reduction) produces dramatic payment savings. Applying the same $75,000 to a $700,000 balance (11% reduction) produces more modest results that might not outweigh a refinance if rates have dropped meaningfully.
You want to avoid the full refinance process. Refinancing requires a credit check, income documentation, a potential appraisal, and 30 to 45 days of processing time. If your credit situation is complicated, your income verification is difficult, or you simply want a fast and simple solution, the recast is dramatically easier.
You expect to sell or refinance within a few years. Refinancing upfront costs take time to recoup. If your break-even is 3 years and you might sell in 2, refinancing costs you money. A recast with its minimal $250 fee has almost no break-even — any month of reduced payments is a net win.
You want lower payments without changing your payoff date. The recast keeps your existing payoff date intact. If you're satisfied with your current timeline and just want payment relief, recast delivers that cleanly.
When Refinance Wins
The refinance is the better choice when specific conditions make it more powerful than a recast. The key driver is the interest rate differential between your current loan and what you can get today.
Rates have dropped significantly since your origination. If market rates are 1% to 2% or more below your current rate, refinancing captures that rate savings on every remaining dollar of your balance. A recast provides no rate benefit — it only reduces the balance while keeping the same rate. When rates have moved materially in your favor, the refinance's rate benefit usually outweighs the recast's balance-reduction benefit.
You want to change your loan term. Recasting preserves your current remaining term exactly. If you want to shorten or lengthen your remaining loan term, a refinance is the only way to do that. See the Rate-and-Term Refinance Calculator to model term change scenarios.
You want to change your loan type. If your current loan is an FHA loan with mortgage insurance, a conventional loan now might eliminate PMI. If you have an adjustable-rate mortgage and want a fixed rate, you need a refinance. Recasting is only available for the loan you already have.
Your servicer doesn't offer recasting. If your loan is FHA, VA, or USDA, or if your conventional servicer simply doesn't offer recast, the choice is made for you. Confirm recast eligibility before running the numbers.
Common Recast vs Refinance Scenarios
Scenario 1: Inherited Money, Low Rate Locked In
Jennifer has a $310,000 mortgage at 3.25% (locked in 2021) with 25 years remaining. She inherits $80,000 and wants lower payments. Current payment: $1,512/mo. Recast: $230,000 balance at 3.25% for 300 months → new payment: $1,123/mo. Savings: $389/mo. Refinance rate available today: 6.75% for 25 years. Refinance payment on $310,000: $2,152/mo — more than her current payment. The recast is the unambiguous winner here. Jennifer's 3.25% rate is a valuable asset she cannot replicate today, and refinancing would dramatically increase her payment. The recast lets her extract the value of her lump sum without giving up her low rate.
Scenario 2: Rates Dropped 1.5% Since Origination
David has a $340,000 mortgage at 7.5% (originated 2023) with 27 years remaining. He has $50,000 from a bonus. Current payment: $2,387/mo. Recast option: $290,000 balance at 7.5% for 324 months → new payment: $2,036/mo. Savings: $351/mo. Refinance option: $340,000 at 6.00% for 25 years. New payment: $2,188/mo. At first glance, recast saves more per month ($351 vs $199). But the refinance's lower rate means dramatically less total interest over the remaining term. Total interest recast scenario: ~$369,000. Total interest refinance scenario: ~$316,000 plus $8,000 closing costs = $324,000. Refinance saves roughly $45,000 more in total interest. If David plans to stay 10+ years, refinancing wins on lifetime cost even though the recast produces larger initial monthly savings.
Scenario 3: Modest Rate Drop and Large Bonus — Close Call
Maria has a $280,000 mortgage at 6.75% with 22 years remaining. She has a $60,000 year-end bonus. Current rate-and-term refinance quote: 6.25%. Recast: $220,000 at 6.75% for 264 months → new payment: $1,670/mo (savings: $383/mo). Refinance: $280,000 at 6.25% for 22 years → new payment: $2,009/mo (savings: $44/mo). Break-even on $7,500 closing costs: 170 months (14 years — nearly the full remaining term). Total recast interest: ~$220,600. Total refinance interest: ~$230,000 + $7,500 = $237,500. The recast is the clear winner — it saves more per month AND more in total interest in this scenario because the rate reduction (0.5%) is too small to overcome the advantage of reducing the principal by $60,000.
Tips and Strategies
Call your servicer first before anything else. Find out whether your loan is recast-eligible, what the minimum lump sum requirement is, and what the fee is. This takes 10 minutes and saves you from doing detailed calculations for an option that isn't available to you. If your loan is FHA, VA, or USDA, recast is almost certainly off the table and you can skip straight to evaluating the refinance.
Get the recast fee in writing before submitting. Some servicers' websites describe recasting without clearly stating the fee or current requirements. Get written confirmation of the fee, the minimum lump sum, and the processing timeline before submitting your lump-sum payment.
Compare both options with your real lender quote. This calculator is only as accurate as the refinance rate you enter. Get an actual Loan Estimate from a lender before comparing. Using a hypothetical rate that you don't actually qualify for can make the refinance look better or worse than it truly is for your situation.
Remember that recasting doesn't shorten your term — if that matters, refinance. Many borrowers want both lower payments and a shorter payoff timeline. A recast delivers lower payments but keeps your existing payoff date unchanged. If you want to pay off your home sooner, you need to either make extra payments after the recast or choose a refinance with a shorter term.
Consider the opportunity cost of the lump sum. Whether you recast or refinance, you are committing a large sum of money to your mortgage. Make sure this is the best use of those funds before proceeding. If you have high-interest debt, an underfunded emergency reserve, or no retirement savings, those financial priorities should come before using the lump sum to reduce mortgage debt at 5%–7%.
You can recast multiple times if eligible. If your servicer allows recasting, you can potentially do it more than once as future lump sums become available. This makes recasting a useful ongoing tool for borrowers who receive periodic windfalls (annual bonuses, inheritance in stages, etc.) without the overhead of a full refinance each time.
Frequently Asked Questions
Does every lender offer mortgage recasting?
No. Recasting is not universally available. Government-backed loans (FHA, VA, USDA) typically cannot be recast under their program guidelines. Conventional loans are more likely to be recast-eligible, but individual servicers vary. Some large banks and servicers offer recast as a standard option; others do not offer it at all or have discontinued it. The only way to know for certain is to call your current servicer and ask directly. If recasting is important to you, it's worth asking about availability before you close on a new loan — though servicers can and do change their policies over time.
What is the minimum lump sum required for a recast?
Most servicers that offer recasting require a minimum lump-sum payment of $10,000 to $20,000 before they will process a recast request. Some lenders set higher minimums. There is typically no maximum — you can pay down as much as you want. The minimum exists because the administrative overhead of processing a recast isn't worth the effort for very small principal reductions. Always confirm your servicer's specific minimum before planning your recast strategy.
Does recasting affect my credit score?
No. A mortgage recast involves no new credit inquiry, no new loan, and no change to your credit report beyond the gradual reduction in your outstanding balance (which is mildly positive). This is one of the significant advantages of recasting versus refinancing: refinancing involves a hard credit inquiry that temporarily reduces your credit score by a few points, plus the new account and account age implications of a new loan appearing on your credit report. A recast is credit-neutral.
Can FHA and VA loans be recast?
Generally no. FHA loans are not eligible for recast under HUD guidelines. VA loans are also generally ineligible for recast under VA program rules. USDA loans similarly cannot be recast. If you have a government-backed loan and want to reduce your monthly payment using a lump sum, your options are: pay down the principal without requesting a recast (your payment won't change but you'll build equity faster and pay less total interest), or refinance into a conventional loan at current rates. If your government loan has a very low rate, the refinance option may not make sense, and simply paying down principal without recasting may be your best approach.
What if I want a shorter payoff date after making the lump-sum payment?
A recast does not shorten your payoff date — it only lowers your monthly payment while keeping the same remaining term. If you want to both lower your payment and shorten your term, a refinance is the appropriate tool. You can also achieve a shorter payoff through a hybrid approach: recast to lower the required payment, then voluntarily make extra payments each month to pay off sooner than required. This gives you the lower required payment of the recast as a safety net while still achieving earlier payoff if you maintain the extra payment discipline.
Is there a tax difference between recasting and refinancing?
The mortgage interest you pay is potentially deductible in both scenarios, subject to the same IRS rules and limits. However, in a recast, you will pay less interest going forward because your balance is lower — which means a smaller potential deduction. In a refinance, you may be paying a different rate, which also affects the interest amount. Neither the recast nor the refinance changes the fundamental deductibility rules. Closing costs on a refinance are generally not immediately deductible as a lump sum but may be amortized over the life of the loan in some cases. Consult a tax professional for guidance specific to your situation.
Can I recast after I just refinanced?
In theory, yes — if your new servicer offers recasting and you receive a lump sum after refinancing, you could request a recast of the new loan. There may be a waiting period after closing before a recast request is accepted (some servicers require 90 to 180 days of payment history first). This could be a useful strategy if you refinanced to get a better rate and later receive a bonus or inheritance that you want to use for a principal reduction without another full refinance.
How long does a recast take?
The recast process is much faster than refinancing. After you make the lump-sum payment and submit a written recast request with the fee, most servicers process the request within 3 to 30 days. Your servicer will send you a revised payment schedule showing the new lower monthly payment, which typically takes effect the following month or the month after. The entire process from request to revised payment is usually 2 to 6 weeks, compared to 30 to 45 days for a refinance.
Related Calculators
These tools work well alongside the Recast vs Refinance Calculator:
- Refinance Savings Calculator — Detailed refinance savings analysis with break-even modeling
- Break-Even Calculator — Focused analysis of how long to recoup refinance closing costs
- Rate-and-Term Refinance Calculator — Full rate and term change analysis
- Amortization Calculator — See your full payment schedule under either scenario
- Closing Cost Calculator — Estimate your refinance closing costs
External Resources
Learn more about mortgage recasting and refinancing from these authoritative sources:
- CFPB: What Is a Mortgage Refinance and How Does It Work? — The Consumer Financial Protection Bureau's overview of mortgage refinancing, including when it makes sense and what to watch out for.
- HUD: Refinancing — The Department of Housing and Urban Development's consumer resources on refinancing, including FHA-specific programs.
- Freddie Mac: Refinancing Guide — Freddie Mac's homeowner education materials on evaluating refinancing options and understanding the process.