A mortgage recast and a refinance both can lower payments, but they solve different problems. A recast keeps your existing loan and rate while re-amortizing after a large principal prepayment. A refinance replaces the loan, usually to change rate, term, or cash-out. Choose the fork with fees and break-even in mind.
What a recast does
After you pay a lump sum toward principal, some servicers can recast the amortization schedule so the monthly principal-and-interest payment drops while the interest rate and loan identity stay the same. Fees are often modest compared with refinance closing costs, but not every loan type allows recasting.
Estimate the new payment path with the mortgage recast calculator.
What a refinance does
Refinancing pays off the old loan with a new one. That can reduce rate, shorten or lengthen term, switch product types, or pull equity out. Closing costs, hard credit pulls, and possible rate-lock timing are part of the trade.
Compare the current payment to a new quote using a mortgage calculator, then divide closing costs by monthly savings for a simple break-even month count.
When recast usually wins
You like your current rate, you have a large cash sum, and your servicer offers recast at a low fee. Stretching for a refinance when rates are not better can waste closing costs.
When refinance usually wins
Your rate is meaningfully higher than available market rates, you need to change loan type or term, or you need cash-out for a purpose that justifies fees. Run break-even carefully if you may move within a few years.
Fee break-even sketch
If a recast fee is small and payment drops enough to matter, recast can win when your rate is already good. If refinance closing costs are ,000 and monthly savings are , simple break-even is about 50 months—longer than many people stay in the home.
Frequently Asked Questions
Does a recast change my interest rate?
No. It re-amortizes principal after a lump-sum payment on the same rate (when the servicer allows it).
Is recast the same as principal prepayment without recast?
Prepaying reduces balance either way. Recast specifically rebuilds the payment schedule so the required monthly payment falls.
Which has higher fees?
Refinance closing costs are usually higher than a recast fee, but confirm both quotes in writing.
Can every mortgage recast?
No. Government-backed and some other products may restrict or disallow recasting. Ask your servicer.
Conclusion
If your rate is already competitive and you have lump-sum cash, ask about recast first. If you need a new rate or loan structure, model refinance break-even before you pay closing costs.
Run the numbers in the Mortgage Recast Calculator and compare with Mortgage Calculator and what is a mortgage recast.