Mortgage Recast vs Refinance 2026: Which Saves You More?
Recast for $250 vs refinance for $6,000+ · Keep your low rate · Lower your payment
If you have a low rate from 2020-2021, recasting may be the smartest move
Quick Answer
A mortgage recast lowers your monthly payment for just $250-$500 by re-amortizing your loan after a lump-sum principal payment — and you keep your existing interest rate. A refinance costs $6,000-$15,000 but can lower your rate, change your loan term, or remove PMI. If your current rate is below today's market rates, recast. If you can get a lower rate, refinance. Compare your options at MRC.
Recast vs Refinance: Side-by-Side Comparison
| Feature | Mortgage Recast | Refinance |
|---|---|---|
| Cost | $250-$500 | $6,000-$15,000 |
| Interest rate | Stays the same | Can lower (or raise) |
| Loan term | Stays the same | Can change (15yr, 30yr) |
| Credit check | Usually not required | Full credit pull |
| Appraisal | Not required | Usually required |
| Time to process | 2-4 weeks | 4-8 weeks |
| Minimum payment | $10,000+ lump sum | No lump sum needed |
| Loan types | Conventional only | All loan types |
| Removes PMI? | No (separate request) | Yes (if 20% equity) |
| Best for | Low rate + lump sum cash | High rate or need loan change |
Real Example: $300K Mortgage with $50K Lump Sum
Recast Scenario
- Original balance: $300,000
- Rate: 3.25% (from 2021)
- Lump sum: $50,000
- New balance: $250,000
- Remaining term: 25 years
- Old payment: $1,308/mo
- New payment: $1,224/mo
- Savings: $84/mo ($1,008/yr)
- Cost: $300 recast fee
- Rate stays: 3.25%
Refinance Scenario
- Original balance: $300,000
- Old rate: 3.25% → New rate: 6.50%
- Lump sum: $50,000 (applied at closing)
- New balance: $250,000
- New term: 30 years
- Old payment: $1,308/mo
- New payment: $1,580/mo
- Increase: $272/mo
- Cost: $10,000 closing costs
- Rate goes UP to 6.50%
In this scenario, recasting saves $84/month for just $300, while refinancing to today's higher rates would INCREASE the payment by $272/month plus $10,000 in closing costs. If you have a low rate from 2020-2021, recasting is almost always better.
Not sure which option is right for you?
Compare mortgage lenders to see current refinance rates. If today's rates are higher than yours, recasting is likely your best bet.
When to Recast vs When to Refinance
✅ Choose Recast When:
- • Your current rate is below today's market rates (3-4% range)
- • You have a lump sum ($10K+) from inheritance, bonus, or savings
- • You want to lower your monthly payment, not your rate
- • You want to avoid credit checks and appraisals
- • You have a conventional loan (FHA/VA cannot be recast)
- • You want to keep your same payoff date
✅ Choose Refinance When:
- • Today's rates are lower than your current rate
- • You want to switch from FHA to conventional (remove MIP)
- • You want to shorten your term (30yr → 15yr)
- • You need cash out (cash-out refinance)
- • You want to remove PMI and have 20% equity
- • You have an FHA/VA loan that cannot be recast
Compare Your Options Today
See current refinance rates and compare with recasting. Find the option that saves you the most money.
Compare Lenders Free →How to Recast Your Mortgage: Step by Step
Check if your lender allows recasting
Contact your mortgage servicer. Most conventional lenders allow it. FHA and VA loans generally do not qualify.
Confirm minimum lump-sum requirement
Most lenders require a minimum principal reduction of $10,000 or 10% of the loan balance, whichever is greater.
Submit your lump-sum payment
Make the payment and request the recast. The lender applies the funds to principal and recalculates your amortization schedule.
Pay the recast fee ($250-$500)
The lender charges a processing fee for re-amortizing your loan. This is paid at the time of the recast request.
Receive new payment schedule
Within 2-4 weeks, your lender sends a new amortization schedule with your lower monthly payment. Your rate and payoff date stay the same.
Related Guides
Frequently Asked Questions
What is a mortgage recast?
A mortgage recast (re-amortization) is when you make a large lump-sum payment toward your principal, and your lender recalculates your monthly payment based on the new lower balance using your same interest rate and remaining term. The cost is typically $250-$500, and your rate stays the same.
→ Compare refinance rates to decide — free, no obligationIs recasting better than refinancing?
Recasting is better if you have a low interest rate (below current market rates) and want to lower your monthly payment without paying refinance closing costs. Refinancing is better if you can get a lower interest rate, want to change your loan term, or need to switch loan types (e.g., FHA to conventional to remove PMI).
→ Compare refinance rates to decide — free, no obligationHow much does it cost to recast a mortgage?
Mortgage recast fees typically range from $250 to $500. Some lenders charge up to $1,000. This is dramatically cheaper than refinancing, which costs 2-5% of the loan amount ($6,000-$15,000 on a $300,000 mortgage).
→ Compare refinance rates to decide — free, no obligationWhich lenders allow mortgage recasting?
Most major lenders allow recasting on conventional loans, including Wells Fargo, Chase, Bank of America, and PennyMac. FHA and VA loans generally cannot be recast. Check with your specific servicer — some require a minimum lump-sum payment of $10,000 or more.
→ Compare refinance rates to decide — free, no obligationCan I recast my mortgage and keep the same rate?
Yes. The main advantage of recasting is that you keep your existing interest rate. If you have a 3% rate from 2021 and current rates are 6.5%, recasting lets you lower your payment without losing your low rate. Refinancing would replace your 3% rate with today's higher rate.
→ Compare refinance rates to decide — free, no obligationDoes recasting remove PMI?
No. Recasting does not remove PMI. PMI removal depends on your loan-to-value ratio, not your payment amount. However, if your lump-sum payment brings your LTV below 80%, you can separately request PMI cancellation. The recast lowers your payment, and the PMI removal further reduces it.
Written by
Emily Chen
Mortgage & Loan Structuring Specialist · 12 years experience
Emily specializes in helping homeowners optimize their mortgage structure through recasting, refinancing, and strategic prepayments.
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