Overview
Both recasting and refinancing lower your monthly payment, but they work very differently. A recast applies a lump sum to your principal and re-amortizes at your existing rate — it costs about $250 and takes a week. A refinance replaces your entire loan with a new one at a new rate — it costs $5,000-$15,000 and takes 30-45 days. The right choice depends on whether your current rate is already good.
Side-by-Side Comparison
| Feature | Mortgage Recast | Refinance |
|---|---|---|
| Cost | $150-$500 flat fee | $5,000-$15,000 in closing costs |
| Timeline | 1-2 weeks | 30-45 days |
| Interest Rate | Stays the same | New rate (could be higher or lower) |
| Loan Term | Stays the same | Resets (new 15 or 30-year term) |
| Credit Check | No | Yes — full underwriting |
| Appraisal | No | Usually required |
| Minimum Lump Sum | Typically $5,000-$10,000 | N/A |
| Payment Reduction | Moderate (based on lump sum size) | Can be significant (if rate drops) |
| Availability | Not all lenders offer it | Available from any lender |
Pros & Cons
Mortgage Recast
Advantages
Extremely low cost ($150-$500)
Fast process (1-2 weeks)
No credit check or appraisal needed
Keeps your existing (potentially low) interest rate
No change to loan term — you're still on track to pay off on time
Disadvantages
Requires a significant lump sum ($5,000+)
Doesn't change your interest rate
Not all lenders offer recasting
Government-backed loans (FHA, VA, USDA) typically can't be recast
Refinance
Advantages
Can significantly lower your interest rate
No lump sum required
Can change loan term (30 to 15, or vice versa)
Can switch loan type (ARM to fixed, etc.)
Available from any lender — shop for best rate
Disadvantages
High closing costs ($5,000-$15,000)
Lengthy process (30-45 days)
Requires credit check, income verification, appraisal
Resets your loan term (may pay more total interest)
May not make sense if rates haven't dropped significantly
When to Choose Each Option
Choose Mortgage Recast if...
Choose a recast if you have a lump sum (inheritance, bonus, sale proceeds), your current interest rate is already good (below market rates), and you want a quick, cheap way to lower your payment. Recasting is ideal for borrowers who locked in low rates during 2020-2021 and don't want to give them up.
Choose Refinance if...
Choose a refinance if your current rate is significantly above market rates (1%+ higher), you want to change your loan term, or you don't have a lump sum. Refinancing makes sense when the monthly savings will recoup closing costs within 2-3 years.
The Bottom Line
If you have a low interest rate and a lump sum, recasting is almost always the better choice — it's faster, cheaper, and preserves your rate. If your rate is high and you need to lower it, refinancing is the only option. Use our recast vs refinance calculator to compare the exact savings for your situation.
Run the Numbers
Frequently Asked Questions
A mortgage recast is when you make a large lump-sum payment toward your principal, and your lender re-amortizes the remaining balance over the remaining term at your existing interest rate. This lowers your monthly payment without changing your rate or term.
It depends on the lump sum size. A $50,000 recast on a $300,000 balance at 6.5% would lower your monthly payment by approximately $325/month. The fee is typically just $250.
Generally no. FHA, VA, and USDA loans typically cannot be recast. Recasting is primarily available for conventional loans. Check with your loan servicer to confirm eligibility.