Mortgage recast vs refinance
This is not financial advice.
A recast recalculates the payment on your existing mortgage after a principal reduction. A refinance replaces the mortgage with a new loan. Both can change a monthly payment, but they do not change it for the same reason.
The useful comparison is not simply which option produces the smaller payment. Check how much cash each requires, how long you will be making payments and what interest remains from today onward.
Compare the terms side by side
| Question | Recast | Refinance |
|---|---|---|
| Is there a new loan? | No, for the standard recast described here | Yes |
| Does the note rate change? | No | The new loan has its own rate |
| Does the loan term change? | Existing maturity is retained | A new term is agreed |
| Is a principal lump sum central to the process? | Yes | Not necessarily |
| Who confirms availability? | Your current servicer | The proposed new lender |
Refinancing can involve closing costs and qualification requirements. Recasting has its own eligibility rules and possible charges. Obtain actual terms rather than assuming either route is available to you.
Keep the comparison on the same footing
Compare the same starting balance and the same available cash. If you apply a lump sum in one scenario but not the other, you are comparing different uses of your savings as well as different loan arrangements.
A new, longer term may reduce the payment while increasing the number of years you pay interest. Compare remaining interest and the projected balance at the same future date, not just the first month's bill. Costs paid upfront and costs added to a new balance should be shown separately.
When the recast calculator is useful
The home calculator models keeping your existing rate and remaining term. It does not predict a refinance rate, approve a new loan or tell you which option to choose. For refinancing, use the actual proposed loan terms and official loan disclosures.
For the basic distinction between replacement borrowing and keeping an existing loan, see the CFPB explanation of refinancing. Your circumstances, rather than a general rule, determine which comparison is relevant.
Method and transparency
Last updated: 6 November 2026. Local technical preview only. This is not financial advice.