Refinance vs Recast: How to Compare
Published · Last reviewed
Educational comparison only. Not a quote, recommendation, or offer of credit.
Refinance vs Recast: side by side
| Refinance | Recast | |
|---|---|---|
| Changes the interest rate? | Yes, new rate set at today's market | No, original rate stays in place |
| Changes the term? | Yes, the new loan term can be longer or shorter | No, remaining term is unchanged |
| Requires requalification? | Yes, full credit, income, and asset underwriting | Usually no full requalification, depends on servicer policy |
| Closing costs | Full refinance closing costs | Typically a small servicer fee |
| Affects the payment | New payment based on new rate, new balance, and new term | New, lower payment based on the same rate and remaining term applied to the new balance |
| Cash needed | Closing costs, sometimes rolled into the loan | Lump sum principal payment plus the servicer fee |
| Availability | Available across most conforming and government programs | Allowed on many conventional loans, generally not on FHA, VA, or USDA |
When each option tends to make more sense
When refinance tends to fit
When a refinance tends to fit
- Today's rate is meaningfully lower than the existing rate
- Borrower wants to change the term, switch from ARM to fixed, or take cash out
- There is enough holding period to recover closing costs
- Borrower can pass full underwriting today
When recast tends to fit
When a recast tends to fit
- Existing rate is already attractive and worth keeping
- Borrower has a lump sum to apply, such as proceeds from a prior home sale
- Goal is to lower the required monthly payment without resetting the term
- Avoiding a full refinance and its closing costs is a priority
Run the numbers
- Refinance Calculator
Compare a refinance against the existing mortgage.
- Break-Even Calculator
See how long it takes to recover refinance closing costs.
- Prepayment Calculator
Model how extra principal changes the payoff path.
- Amortization Calculator
Compare schedules before and after a lump sum reduction.
Frequently asked questions
Does a recast lower the interest rate?
How much money is needed to recast?
Can FHA or VA loans be recast?
Is a recast the same as paying extra principal?
Which option saves more in total interest?
Does a recast require an appraisal?
Other decision guides
Refinance Decision Guide
Includes a hypothetical 29-month break-even example, 25-year vs. 30-year loan comparison, Loan Estimate field guide and a fillable quote sheet.
Free fillable PDF. No email or signup required. Educational information, not a loan offer or personalized advice.
Was this helpful?
Was this helpful?
Mortgage Today is owned and operated by Mektra LLC.
Mortgage Today is an educational brand and does not originate, broker, or fund loans of any kind. If you submit a mortgage inquiry, agree to loan officer contact, and our network can serve your state, we forward your information to a licensed loan officer in our network. An introduction to another lender requires a separate request.