Mortgage recast vs. refinance
Both can lower your monthly payment — but one keeps your loan and the other replaces it. The right choice usually comes down to a single question: have interest rates dropped since you got your mortgage?
The core difference
| Recast | |
| New loan? | No — same loan, re-amortized |
| Interest rate | Unchanged |
| Closing costs | None — just a fee, often $150–$500 |
| Credit check | No |
| Requires a lump sum | Yes (often a $5k–$10k minimum) |
| Lowers payment? | Yes |
| Lowers rate? | No |
A refinance is the opposite trade: it replaces your mortgage with a brand-new loan, which can lower your rate and term — but you pay closing costs (roughly 2–5% of the loan), go through underwriting and a credit pull, and reset the clock on your loan.
When a refinance wins
- Today's rates are meaningfully lower than your current rate.
- The interest you'd save outweighs the closing costs within a few years (your "break-even").
- You want to change your loan term (e.g. 30 years down to 15).
When a recast wins
- You like your current rate (or rates have risen since you locked it).
- You have a lump sum and mainly want a lower required monthly payment.
- You want to avoid closing costs, underwriting, and a credit inquiry.
Don't forget the third option
If your real goal is to pay the least total interest, neither may be best — applying your lump sum to principal and keeping your current payment pays the loan off soonest. See recast vs. extra principal, and run all the numbers in the recast calculator.
Frequently asked
- Is it cheaper to recast or refinance?
- A recast is almost always cheaper up front — typically a single fee of $150–$500 with no closing costs. A refinance has closing costs of roughly 2–5% of the loan amount. Refinancing only pays off if a lower interest rate saves more than those costs over time.
- Does a recast or refinance hurt your credit?
- A recast does not involve a credit check or a new loan, so it has no direct credit impact. A refinance is a new loan application with a hard credit inquiry and a new account, which can temporarily lower your score.
- Can you refinance and recast?
- Not at the same time, but you could refinance to a lower rate and later recast that new loan if you come into a lump sum and want to lower the payment further.