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Mortgage Recast vs Refinance vs Extra Payment Calculator

Three ways to use a lump sum, and what each one actually buys

Data verified: Aug 2026 · Source: Federal Reserve H.15

A mortgage recast calculator that compares recasting against refinancing and a lump-sum extra payment on payment, total interest and payoff date.

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Four options compared
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How this is calculated

A recast keeps your existing loan, rate and payoff date, but re-amortizes a smaller balance after you pay the lump sum in. Your monthly payment drops. You do not need to qualify again, there is no appraisal, and the fee is a few hundred dollars rather than a few thousand.

A refinance replaces the loan entirely. It is the only option that changes your interest rate, but it costs 2% to 5% of the balance in closing costs and requires requalifying. An extra principal payment does the opposite of a recast: your payment stays the same, but the loan ends sooner and you pay dramatically less interest.

Formula
payment = P × r(1+r)^n / ((1+r)^n − 1) r = APR/12, n = months recast: re-amortize (balance − lump) over the SAME remaining n at the SAME rate refi: new payment on the balance at the new rate and term, plus closing costs extra: apply lump to principal, keep the payment constant, iterate to payoff breakEvenMonths = closingCosts / (oldPayment − newPayment)
A recast lowers the payment but keeps the payoff date. An extra payment keeps the payment but pulls the payoff date forward — and almost always saves the most interest.

Worked example

A $300,000 balance at 6.5% with 360 months remaining, and $50,000 available.

Current payment$1,896.20
After a $50,000 recast (plus $250 fee)$1,580.17
Refinance to 5.75% with $9,000 of costs$1,750.72
Refinance break-even62 months
Recast saves per month$316.03

Which one is actually right

It depends entirely on what you need.

  • Need lower monthly cash flow, keeping your rate — recast. Cheap, easy, no requalifying.
  • Want to pay the least interest overall and can afford the current payment — extra principal payment. It wins on total cost almost every time.
  • Your current rate is materially above market and you will stay put for years — refinance, but check the break-even.
  • Rates have risen since you borrowed — do not refinance. A recast lets you use the lump sum while keeping your old, better rate.

Recasting is not universally available

Most conventional loans allow it; FHA, VA and USDA loans generally do not. Servicers usually require a minimum lump sum, often $5,000 or $10,000, and some limit how often you can do it. Ask your servicer before planning around it — and note that a recast is a request, not a right.

The break-even is not the whole story

Break-even on a refinance tells you when the monthly saving has repaid the closing costs. It ignores the fact that a fresh 30-year term restarts the amortization clock — early payments are almost all interest. Refinancing a loan you are ten years into back to a 30-year term can lower the payment and still increase total interest paid. Compare total cost, not just the payment.

Frequently asked questions

What is the difference between a recast and a refinance?
A recast keeps your existing loan, interest rate and payoff date, and simply re-amortizes a smaller balance after you pay a lump sum in, which lowers the monthly payment for a fee of a few hundred dollars. A refinance replaces the loan entirely, which is the only way to change the rate, but costs thousands and requires requalifying.
Does recasting change my interest rate?
No, and that is precisely the point of it. You keep the rate you already have, which matters enormously if you borrowed when rates were lower than they are today. For anyone holding a mortgage from the low-rate years, a recast is the only way to put a lump sum to work without surrendering that rate.
Why does an extra payment save more than a recast?
Because your monthly payment stays the same. After a recast the lower payment means less principal is retired each month, so the loan still runs its full original term. With a straight extra payment the loan ends years early, and all the interest that would have accrued over those final years is simply never charged at all.
Do I have to requalify to recast?
Normally not. There is typically no credit check, no appraisal and no income verification, because the lender is not taking on new risk. That makes recasting particularly attractive if your income has changed, you have become self-employed, or your credit has taken a knock since you originally borrowed and a refinance would be difficult to obtain.
Are closing costs really 2% to 5%?
That is the usual range, covering origination, appraisal, title insurance, recording and lender fees. A no-closing-cost refinance does exist, but it pays for itself through a higher interest rate, so it moves the cost rather than removing it. On a $300,000 balance the difference between 2% and 5% is $9,000, which is worth shopping for.
Can I recast after making extra payments?
Often yes. If you have paid down principal steadily over time and now want that reflected in a lower required payment, a recast converts the reduced balance into a reduced payment. Servicers usually set a minimum, commonly $5,000 or $10,000, and some limit how often you can do it, so ask before planning around it.

Related calculators

Biweekly Mortgage Calculator True biweekly versus the 13th-payment approximation, and what each saves. Mortgage Points Calculator How long you must keep the loan for discount points to pay off. HELOC vs Cash-Out Refinance Keep a low first mortgage or replace it — compared on blended rate. ARM vs Fixed Calculator Best and worst case adjustable-rate paths against a fixed comparison.
Sources
Federal Reserve H.15 · IRS IR-2025-112 · IRS Rev. Rul. 2026-5 · IRS Rev. Rul. 2026-9
Disclaimer
Estimates for general information only, not mortgage or financial advice. Property tax, insurance, PMI and escrow are excluded — figures here are principal and interest only. Confirm recast availability and fees with your servicer.