By Mike Basti, President and Mortgage Broker · NMLS #322904A recast keeps your existing loan and rate but re-amortizes it after you make a large lump-sum principal payment, lowering your monthly payment for a small fee (often ~$150–$500) and no new loan. A refinance replaces your loan entirely with a new one — the way to change your rate or term, but with full closing costs and underwriting. Recast if you have a good rate and cash to pay down; refinance if you want a lower rate or different term.
| Recast | Refinance | |
|---|---|---|
| Changes your rate? | No (keeps current rate) | Yes |
| Lowers payment? | Yes (after lump sum) | Yes (via rate/term) |
| Cost | Small fee (~$150–$500) | Full closing costs (2–5%) |
| New loan / underwriting? | No | Yes |
| Requires a lump sum? | Yes | No |
When to recast
Recasting shines when you already have a good rate and come into a chunk of cash — a bonus, a home sale, an inheritance — and want a lower payment without giving up that rate or paying big closing costs. You keep the same loan, drop principal, and the servicer re-amortizes the balance over your remaining term. Not all loans allow it (government loans generally don’t), and lenders set a minimum lump sum.
When to refinance
Refinance when your goal requires a new rate or term: rates have fallen, you want to switch from a 30- to a 15-year, drop mortgage insurance, or pull cash out with a cash-out refinance. It costs more and requires underwriting, but it’s the only way to actually change your rate. See how to find your refinance break-even.
Bottom line: Good rate + a lump sum to apply = recast. Want a lower rate or to change your term = refinance. A broker can run both so you keep the cheaper path — and there’s no reason to refinance into a higher rate just to lower a payment a recast could fix.
Worked example: what a recast does to your payment
Say you owe $500,000 at 4.0% with 25 years left (illustrative numbers). You put $100,000 toward principal and recast:
| Balance | Principal & interest | |
|---|---|---|
| Before recast | $500,000 | ~$2,639 |
| After $100,000 recast | $400,000 | ~$2,111 |
The payment drops about $528 a month. The rate and payoff date stay the same. To get a similar payment by refinancing, you would need a new loan at a rate well below 4% plus closing costs, which makes recasting the cheaper path here.
Some buyers plan a recast when moving. They buy the new home with a larger loan, then recast once the old home’s sale proceeds arrive. Confirm the servicer allows this before you count on it.
Recast, refinance, or just prepay?
There is a third option: send extra principal without recasting.
| Option | Monthly payment | Payoff date | Cost |
|---|---|---|---|
| Recast | Drops | Same end date | Lump sum + fee |
| Prepay only | Stays the same | Ends sooner | Any amount, any time |
| Refinance | Can drop or rise | Resets | Full closing costs |
Prepaying saves the most interest if you can keep paying the same amount. Recasting helps when you want the lower required payment for cash-flow room. See our mortgage recast guide for servicer details.
Questions to ask your servicer first
- Does my loan allow a recast, and what is the minimum lump sum?
- What is the fee?
- How long does it take to process?
- Must my payments be current, and must the payment be made first?
If a refinance might beat the recast, we can run both. Rates change daily, so for an accurate quote call 949-379-5320 (Newport Beach) or 310-759-4757 (Marina del Rey).
Frequently asked questions
What is a mortgage recast?
Recasting re-amortizes your existing loan after you make a large lump-sum principal payment, lowering your monthly payment while keeping the same rate and term-end date — for a small fee and no new loan.
Is it better to recast or refinance?
Recast if you already have a good rate and have cash to pay down principal — it’s cheap and keeps your rate. Refinance if you want a lower rate, a different term, to drop mortgage insurance, or to take cash out.
Does recasting lower my interest rate?
No. A recast keeps your current rate; it only lowers the payment by reducing the balance and re-amortizing. To change your rate you must refinance.
Can any loan be recast?
No. Many conventional loans allow it, but government loans (FHA, VA, USDA) generally don’t, and lenders require a minimum lump sum and charge a small fee. Ask your servicer or broker whether your loan qualifies.
How long does a mortgage recast take?
Often a few weeks to a couple of billing cycles after the servicer receives your lump sum and paperwork. Ask your servicer for its exact timeline.
Can I recast more than once?
Some servicers allow multiple recasts, sometimes with limits on frequency. Each one typically requires its own minimum lump sum and fee.
Save Financial, Inc. — NMLS #377740, DRE #01875766. Equal Housing Opportunity. Figures are illustrative for 2026 and not an offer of credit or a guarantee of rates or approval.