A bonus. An inheritance. Cash from a sale. However the money arrived, you have two ways to turn it into a lower payment. People mix these two up all the time. But the math behind them is not close.
What each one actually does
A recast keeps your loan, your rate, and your term just as they are. You pay a big sum off the balance. Then your lender spreads what is left over the same years. Your monthly bill falls. A refinance replaces your loan entirely with a new one, at a new rate, new term, and new closing costs.
Side-by-side
| Recast | Refinance | |
|---|---|---|
| Changes your rate? | No | Yes |
| Changes your term? | No | Yes, if you choose |
| Requires a credit check? | Usually no | Yes |
| Typical cost | $150–$500 flat fee | 2–5% of balance |
| Requires a lump sum? | Yes | No |
| Best when... | Your rate is already good | Today's rate beats yours |
If your current rate is already at or below today's market rate, a recast almost always wins. You get a lower bill for a few hundred dollars. There is no rate risk, and no stack of forms. But if today’s rate is well below yours, a new loan tends to win. That holds even after the fees, once you do the break even math.
When a recast makes more sense
- Your rate is already competitive. A new loan gains you nothing on rate. So paying fees to land the rate you have is just waste.
- You want to avoid a new credit pull and underwritingThe lender checking whether it will really lend to you.Click to open the full glossary.. Recasting is largely an administrative request, not a new loan approval.
- You have a lump sum but don't need cash out. Not after cash? Then a recast gets you the lower bill with none of the work of a full new loan.
When a refinance makes more sense
- Today's rate is meaningfully below yours. The saving comes from the rate change. Only a new loan can get you that.
- You want to change your term. A recast cannot change how long your loan runs. Only a new loan can.
- You need cash out. A cash out loan lets you take money from the home. A recast asks you to put money in.
"If your rate is already competitive, a $300 recastPaying a lump sum, then having your payment recalculated.Click to open the full glossary. fee usually beats a refinance's 2–5% closing costsThe fees you pay to set the loan up and transfer the home.Click to open the full glossary. every time."
Before deciding, run your numbers through our free refinance break-even calculator, which uses today's live 30-year rate. If it doesn't beat yours, a recast is almost certainly the better deal.
Either way, it comes down to one thing. How does your rate stack up against today? We track live rates all the time. So you know the day a new loan starts to add up.
Know your break-even before you decide
CasaCrow compares your loan against live market rates automatically.
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