Refinance vs Recast: Two Ways to Cut Your Mortgage Payment

Some calculations matter for a single decision; this one matters for years. Most homeowners only know about refinancing. Recasting is the quieter cousin — and sometimes the smarter move.

Refinance

New loan, new rate, new term. Closing costs of 2–5% of loan amount. Best when rates have dropped 1%+ since you bought.

Recast

Pay a lump sum against principal, lender re-amortises the same loan. Same rate, lower payment. Usually $250–500 fee.

The decision rule

If rates are lower → refinance. If you have a windfall but love your current rate → recast.

Pro tips

• Recasting keeps your low pandemic-era rate intact — never give that up unless rates beat it.
• Ask your servicer for the recast form; it is not advertised.

Frequently asked questions

Can every mortgage be recast? Most conventional loans yes; FHA and VA loans generally no.

Does recasting hurt my credit? No hard pull, no new account — score is unaffected.

Bookmark the calculator linked above — you will need it more often than you think.