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Refinance vs Mortgage Recast
Looking to lower your mortgage payment? Refinance vs mortgage recast is the choice many homeowners weigh. A refinance is a brand-new loan with a new rate and term; a recast keeps your existing loan and simply re-amortizes it after a lump-sum payment. Here is a clear, balanced comparison.
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Side by side
Refinance vs mortgage recast, at a glance
Both can lower your monthly payment, but they work very differently. Start with the comparison, then read the detail below.
| What to compare | Refinance | Mortgage recast |
|---|---|---|
| What it is | A brand-new loan replaces the old one | Your existing loan is re-amortized |
| Your interest rate | New rate, can go up or down | Keeps your current rate |
| Loan term | You can change the term | Term usually stays the same |
| Up-front cash needed | Closing costs | Lump-sum principal payment |
| Typical fee | Standard closing costs | Small servicer fee |
| Underwriting | Full income & credit review | Generally none |
| Lowers monthly payment | Possible, via rate or term | Yes, balance is recalculated |
| Best when | Rates or your term should change | You have a lump sum and like your rate |
Option one
What is a mortgage refinance?
A refinance replaces your current mortgage with an entirely new loan, ideally on better terms. You can change your interest rate, switch your loan term, move out of an adjustable rate, or pull cash from equity. Because it is a new loan, it comes with closing costs and a full income and credit underwrite. The math works when your long-term savings outweigh the cost of getting the new loan, which is exactly what we help you check before you commit.
Option two
What is a mortgage recast?
A mortgage recast keeps your existing loan in place. You make a lump-sum payment toward your principal, then the servicer re-amortizes the remaining balance over your current term. Your interest rate and payoff date stay the same, but your monthly payment drops because the balance is smaller. There is usually only a small servicer fee and typically no new underwriting or credit pull. It can suit a homeowner who already has a rate they like and a lump sum to put down.
When each makes sense
Refinance or recast: which fits your situation?
Neither is always the right answer. The best choice depends on your current rate, whether you want to change your term, and whether you have a lump sum on hand.
A refinance tends to fit when
You want a different interest rate or loan term, you want to move out of an adjustable rate, or you need to pull cash from equity. It makes sense when the long-term savings beat the closing costs before you would sell or pay off the home.
A recast tends to fit when
You already have a rate you are happy with, you have a lump sum to apply to principal, and you simply want a lower monthly payment without resetting your loan, paying closing costs, or going through underwriting again.
Trade-offs
Pros and cons to weigh
Each path has clear advantages and trade-offs. Here is a balanced view to think through.
Refinance
Pros: you can change your rate and term and tap equity. Cons: closing costs, a full underwrite, and a larger or longer loan can mean more interest over its life.
Recast
Pros: keep your current rate, low fee, no underwriting, and a lower payment. Cons: it requires a lump sum, your rate cannot improve, and not every loan type allows it.
How a review works
How we help you compare, with no pressure
Four simple steps, and a human walks you through each one.
Share your goal
Tell us your current rate and what you want to change, no credit pull to start.
See both paths
We lay out refinance and recast side by side for your loan and timeline.
Run the math
We compare a lower payment now against costs and savings over the life of the loan.
You decide
If and only if it fits, we move forward. There is never any obligation.
Keep reading
Related refinance resources
Questions
Refinance vs mortgage recast FAQ
What is the difference between a refinance and a mortgage recast?
A refinance replaces your existing loan with a new one, with a new rate and term and closing costs. A recast keeps your current loan and rate, applies a lump-sum payment to principal, and re-amortizes the balance to lower your monthly payment.
Does a mortgage recast change my interest rate?
No. A recast keeps your existing interest rate and payoff date. Only your monthly payment goes down because the principal balance is reduced and re-amortized. To change your rate, you would refinance instead.
Which is cheaper, a refinance or a recast?
A recast usually costs only a small servicer fee, while a refinance has full closing costs. A refinance can still come out ahead if it meaningfully changes your rate or term, which is the math we walk through with you.
Do I need to qualify again for a recast?
Generally no. A recast typically does not require new underwriting or a credit pull, since you keep your existing loan. A refinance is a new loan and does include a full income and credit review.
Can every loan be recast?
Not always. Some loan types and servicers do not allow recasting, and there is usually a minimum lump-sum amount. We will check whether your loan qualifies and compare it against a refinance so you can choose with confidence.
Not sure whether to refinance or recast?
Book a free refinance review and we will compare a refinance and a recast for your loan, with no pressure and no credit pull to start.