Mortgage Recast vs. Refinance: Which Should You Choose?

Both put more money toward your mortgage, but a recast lowers your payment while a refinance changes your rate. Here's how to decide.

Written by Jordan Ellery, Personal-finance writer · Reviewed by Priya Nadella, CPA, Certified Public Accountant (reviewer) · Updated July 2026

The core difference

A recast and a refinance are often confused, but they solve different problems. A recast lowers your monthly payment by applying a lump sum to principal and re-amortizing the same loan over the same remaining term at the same rate. A refinance replaces your loan entirely with a new one — which can change your interest rate, your term, or both.

In short: choose a recast to lower your payment while keeping a good rate; choose a refinance to capture a lower rate (or pull out cash). Run your own numbers in the recast calculator and the refinance calculator to compare.

Cost and effort

A recast is far cheaper and simpler. Expect a flat fee of a few hundred dollars, no credit check, no appraisal, and no closing costs. A refinance is a brand-new mortgage: it typically costs 2% to 5% of the loan amount in closing costs, requires a credit check and appraisal, and takes weeks to close.

Because of those closing costs, a refinance only pays off if you keep the new loan past its break-even point — the month when accumulated savings exceed the upfront costs. Our refinance calculator computes that break-even for you.

A quick decision guide

Ask two questions. First: do you want a lower rate? If today's rates are meaningfully below yours, a refinance is likely worth it despite the costs. If your current rate is already low, refinancing would raise it — so recast instead. Second: do you have a lump sum? A recast requires one; a rate-and-term refinance does not.

Many homeowners with a low pandemic-era rate and a recent windfall are better served by a recast: it cuts the payment without surrendering the rate. Borrowers who bought when rates were high should watch for a refinance opportunity as rates fall.

Informational only — not financial or tax advice. This article is general educational information and may not reflect current figures or your individual situation. Tax and financial rules change; verify with the IRS or a qualified professional before acting.