Recast vs. refinance: what actually changes
A recast keeps your note. A refinance replaces it. That single difference drives the rate you keep, the term you keep, the costs you pay and the underwriting you sit through.
| Do nothing | Recast | Lump sum, no recast | Refinance | |
|---|---|---|---|---|
| Interest rate | Unchanged | Unchanged | Unchanged | Replaced with today’s |
| Maturity date | Unchanged | Unchanged | Earlier | Reset |
| Monthly P&I | Unchanged | Lower | Unchanged | Depends on rate and term |
| Total interest | Highest | High | Lowest | Usually high — amortization restarts |
| Cost to do it | None | $0–$700, typically $250 | None | Closing costs, typically $4k–$8k |
| Credit check | No | No | No | Yes |
| Appraisal | No | No | No | Usually |
| Time to complete | — | 45–90 days | Immediate | 30–45 days |
| Eligible loans | All | Conventional only | All | Most |
Why refinancing usually loses right now
77.9% of US mortgages carry a rate below 6%, and market rates sit around 6.5%. Refinancing surrenders the rate on the note and restarts amortization, which front-loads interest all over again. For most households holding a sub-6% note, the refinance column is not close.
The exception is a rate that is genuinely above market, or a term change you want for its own sake. The calculator prices both variants — costs rolled into the balance, and costs paid in cash — because the two produce different lifetime numbers.
Rate spread, illustrated
The same lump sum, on a sub-4% note
$310k at 3.25%, 6 years in, $40k lump. Refinancing at 6.5% would surrender a 3.25% rate, which is why it is not modelled here as a serious option — but the recast question is still live, and the answer is the same as everywhere else.
| Option | Payment | Remaining term | Remaining interest |
|---|---|---|---|
| Recast | $1,148.93 | 288 months | $101,342 |
| Lump sum, no recast | $1,349.14 | 228.4 months — 60 earlier | $78,565 |
Recasting costs $22,777 more in total interest here, and buys $200.21 a month. On the canonical 6.5% case the same trade is $109,736 for $332.46 a month. The shape of the answer does not change with the rate; only its size does.
When a recast is the right call anyway
Your income dropped
A permanently lower payment on the same note, with no credit check and no appraisal, is hard to get any other way.
You are carrying two homes
Sale proceeds arrive after the new purchase closes. A recast turns them into cash flow on the loan you kept.
You want the option, not the saving
Nothing stops you paying the old amount after a recast. You have simply bought the right to pay less in a month when you need to.
Your rate is well above market
Then the honest answer is that neither recasting nor paying down is the main question — refinancing is, and the calculator prices it.
Run it on your own numbers
Four outcomes, your servicer’s rules, no email required.