A recast lowers your monthly payment by applying a lump sum to your principal and recalculating the payment over the remaining term, keeping your rate. It usually costs a few hundred dollars. A refinance replaces your loan with a new one, which can change your rate and term but costs thousands. Recast if you like your rate and have cash; refinance if rates have fallen enough.
Side by side
| Recast | Refinance | |
|---|---|---|
| Rate | Stays the same | New rate |
| Term | Stays the same | Can change |
| Cost | Often $150 to $500 fee | Often 2% to 5% of the loan |
| Credit check and appraisal | No | Usually yes |
| Lump sum needed | Yes, often $5,000 to $10,000 minimum | No (unless paying down) |
| Available on | Many conventional loans, not FHA or VA | Most loans |
When a recast makes sense
- You received a lump sum, such as from selling your previous home after buying the new one.
- Your rate is already low.
- You want a lower required payment, not a shorter term.
Example: on a $400,000 balance at 6% with 27 years left, a $50,000 lump sum recast lowers the payment by roughly $310 a month.
When refinancing makes sense
- Rates have fallen enough that the savings cover the closing costs within a few years.
- You want to change the term or remove FHA mortgage insurance.
- You need to take cash out.
Find your break-even with the refinance break-even tool, and see when to refinance.
Or just prepay
A lump sum paid to principal without a recast cuts interest the same way and shortens your loan, but your required payment stays the same. A recast lowers the required payment, giving you more flexibility. Compare with the extra payment calculator.
Ask your servicer whether your loan allows recasting, the minimum lump sum and the fee.
Common questions
What does a mortgage recast cost?
Often $150 to $500, plus a minimum lump sum payment, commonly $5,000 to $10,000.
Can I recast an FHA or VA loan?
Generally no. Recasting is mainly available on conventional loans; check with your servicer.
Does a recast change my interest rate?
No. Your rate and term stay the same; only the monthly payment goes down.
Updated October 2026. Educational content. OfferBacked is not currently a lender and doesn’t issue pre-approvals or loans.