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Refinance vs Recast Calculator

See whether refinancing or recasting your mortgage lowers your monthly payment more, based on your loan balance, remaining term, rates, and costs.

How it is calculated

Each option gets a new monthly payment from the standard amortization formula:

payment = P × i ÷ (1 − (1 + i)−n)

i is the annual rate ÷ 12, n the remaining term in months (rounded to a whole number) and P the principal.

Refinance: P = balance + closing costs, rate = new rate. The closing costs are rolled into the new loan. Recast: P = balance − lump sum, rate = your current rate. Both use the same remaining term, so the refinance does not restart the clock. The difference is refinance payment minus recast payment: positive means the refinance payment is higher. The lump sum is used only in the recast, so with the refinance the tool assumes you keep that cash. Lump sum and closing costs may be 0, but must be filled in; a lump sum equal to or above the balance gives no result. A servicer's recast fee is not included.

Worked example

Balance $300,000, 300 months left, current rate 6.5%, refinance rate 5.5% with $6,000 closing costs, and a $50,000 lump sum for the recast. Refinance: principal 300,000 + 6,000 = 306,000 at 5.5% over 300 months gives $1,879.11 a month. Recast: principal 300,000 − 50,000 = 250,000 at 6.5% over 300 months gives $1,688.02. Difference = 1,879.11 − 1,688.02 = $191.09. The recast payment is lower here, but only because $50,000 of cash was paid in; the refinance keeps that cash.

Try this example →

Common mistakes

  • Concluding that recasting is cheaper because its payment is lower. The recast side includes a $50,000 principal payment that the refinance side does not, so the payments are not like for like.
  • Leaving the lump sum at 0 and reading the recast column as an alternative. With no lump sum the recast payment is just your current payment.
  • Leaving the closing costs or the lump sum blank. A blank field returns no result; enter 0.
  • Entering the original loan amount or term instead of today's balance and the months remaining.
  • Ignoring the lifetime interest. The tool compares monthly payments only, and a lower payment over the same term can still come from a higher total cost, for example when closing costs are rolled into a larger balance.

About this calculator

Refinancing a mortgage replaces your existing loan with a brand-new one — usually at a new interest rate and term — while a recast (also called re-amortization) keeps your original loan and interest rate but re-calculates the monthly payment after you make a large lump-sum payment toward principal, spreading the now-smaller balance over the remaining original term. Refinancing typically involves a credit check, appraisal, and closing costs of roughly 2-5% of the loan amount, while recasting usually only costs a small flat administrative fee (often a few hundred dollars) charged by the loan servicer.

Homeowners who receive a windfall — an inheritance, bonus, or home sale proceeds — and want a lower monthly payment use this comparison to decide between the two paths: refinancing makes sense when current market rates are meaningfully lower than your existing rate, while recasting makes sense when you already have a good rate and just want to reduce your payment using cash you already have, without resetting the loan term or paying refinance closing costs.

This calculator takes your current loan balance, remaining term, interest rate, and a hypothetical lump-sum payment, along with a refinance rate and its closing costs, and compares the resulting new monthly payment under each option so you can see which lowers your payment more for your specific numbers. Note the lump sum is applied only on the recast side; the refinance side models the full balance plus closing costs, so the comparison assumes the cash stays in your pocket if you refinance.

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