Recast vs Refinance Calculator
Have a lump sum and want a lower payment? Compare recasting your current loan with refinancing into a new one. The calculator shows each payment, when the refinance pays back its closing costs, and which path costs less over the years you plan to keep the loan.
Recast vs refinance calculator
Cheaper over your plan
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| Recast | Refinance | |
|---|---|---|
| Monthly P&I payment | ||
| Change vs today | ||
| Cash at the start | ||
| Loan balance after | ||
| Rate / payoff | ||
| Net cost over your plan | ||
| Interest over the full loan |
Net cost = cash paid (lump sum, fees, and payments) plus the balance still owed. It lets loans with different terms be compared at the same date.
Above $0, the refinance has cost less so far. Below $0, the recast has.
Year-by-year net cost table
| Year | Recast | Refinance | Refinance ahead by |
|---|
Recast vs refinance at a glance
New to recasting? Start with what a mortgage recast is, or seewhat servicers charge and require.
| Recast | Refinance | |
|---|---|---|
| Interest rate | Stays the same | New rate |
| Payoff date | Stays the same | New term, often 30 years again |
| Typical cost | Fee of about $150 to $500 | Closing costs of about 2% to 6% of the loan |
| Lump sum needed | Yes, often $5,000 to $10,000 minimum | No |
| Credit check and appraisal | No | Usually yes |
| FHA, VA, USDA loans | Generally not eligible | Eligible, including streamline programs |
How the comparison works
Comparing monthly payments alone is misleading. A refinance that resets the clock to 30 years can show a lower payment simply because it spreads the balance over more years. So the calculator compares net costat each point in time:
Net cost after m months = cash paid at the start + payments made through month m + balance still owed
- Recast path: lump sum and recast fee up front, then the re-amortized payment at your current rate over your remaining term.
- Refinance path: the same lump sum (unless you choose to keep it out) plus closing costs if paid in cash, then a new loan at the new rate and term. If you add closing costs to the loan, the new balance is higher instead.
Counting the balance still owed is what makes the two comparable: a dollar of debt you still owe is a dollar you will have to pay, whether you sell the house or keep paying. The break-even month is the first month the refinance's net cost is at or below the recast's. The result over your plan compares net cost at the number of years you expect to keep the loan.
The common shortcut, closing costs divided by monthly savings, compares the refinance with your current payment rather than with a recast, and ignores term changes. Use it as a rough check, not a decision rule.
Worked example: rates have dropped
You owe $300,000 at 7% with 27½ years left (payment $2,050.85) and have $30,000 to put down. A recast costs $300. A 30-year refinance at 6% has $6,000 in closing costs, paid in cash, and you put the same $30,000 toward it.
- Recast payment: $1,845.76. Refinance payment: $1,618.79.
- The refinance catches up after 2 years 2 months.
- If you keep the loan 7 years, the refinance comes out $12,098 ahead.
- If you sell after 2 years, the recast is still about $370 cheaper.
The refinance also adds 2½ years to the payoff date. Its lower interest rate still wins over the full life of the loan here ($312,761 of interest against $339,103), but only because the rate drop is a full point.
Worked example: your rate is below today's rates
Same loan and lump sum, but your rate is 4.5% (payment $1,586.25) and refinancing would cost 6.25%. The recast lowers the payment to $1,427.63. The refinance would raise it to $1,662.44, never breaks even, and costs $39,413 more over 7 years. Homeowners who locked in low rates are exactly the people a recast is built for.
Which one to choose
A recast usually wins when
- your current rate is at or below what you can get today;
- you may sell or pay off the loan before the refinance breaks even;
- you do not want to restart the payoff clock;
- you want to avoid a credit check, appraisal, and closing.
A refinance usually wins when
- you can lower your rate meaningfully and will keep the loan well past the break-even month;
- your loan is FHA, VA, or USDA and cannot be recast;
- you want to change the loan itself, such as moving from an adjustable to a fixed rate or shortening the term.
Not sure the lump sum should go to the mortgage at all? Compare it with investing in thepay off mortgage or invest calculator. To see recasting on its own, including how it compares with prepaying and keeping your payment, use the mortgage recast calculator.
Frequently asked questions
What is the difference between a recast and a refinance?
A recast keeps your existing loan, rate, and payoff date and lowers the payment after you pay down principal. A refinance replaces the loan with a new one, which can change the rate and the term but comes with closing costs, a credit check, and usually an appraisal.
Is recasting cheaper than refinancing?
Upfront, almost always: a recast fee is usually a few hundred dollars, while refinance closing costs often run 2% to 6% of the loan. Over time, a refinance to a meaningfully lower rate can make up for its costs. The calculator finds the month when that happens.
How do I calculate the refinance break-even point?
The simple version divides closing costs by the monthly payment savings. That overstates the benefit when the new loan has a longer term, so this calculator compares the net cost of each path, meaning cash paid plus balance still owed, month by month, and reports the first month the refinance is ahead.
Can I do both: pay a lump sum and refinance?
Yes. Putting cash toward a refinance at closing (a cash-in refinance) lowers the new loan amount. The calculator does this by default so both paths use the same cash.
When does recasting beat refinancing?
When current rates are at or above your rate, when you expect to move or pay off the loan before the refinance breaks even, or when you do not qualify for a better rate. Recasting also avoids restarting a 30-year term.
Does a recast or refinance affect my credit?
A refinance involves a new credit application and a hard inquiry. A recast does not, because it is a change to your existing loan.
Sources and assumptions
- Fannie Mae Servicing Guide, C-1.2-01, on re-amortizing at the current rate over the remaining term.
- Refinance closing-cost range of 2% to 6% of the new loan: Bankrate. Your lender's Loan Estimate gives your actual figure.
- Both paths assume fixed rates and on-time payments. Escrow for taxes and insurance is excluded because it is the same either way. Investment returns on cash kept out of the refinance are not modeled.
This calculator is an educational estimate, not financial or lending advice. Confirm the recast policy with your servicer and the rate and costs on a lender's Loan Estimate before deciding. See the fulldisclaimer.