Recast vs extra payments
Both send a lump sum to principal. Only one lowers the payment you are required to make.
Private by design. Your numbers stay on this device.
Educational estimates only. Not financial, tax, or lending advice.
What is the difference between a recast and extra payments?
Both send money to principal, but they buy different things. A recast re-amortizes the reduced balance over your remaining term, lowering the required payment while keeping the payoff date. Extra payments leave the required payment alone and shorten the loan instead. A recast is the only one that lowers what you must pay.
What does a mortgage recast actually do?
It applies a lump sum to principal and then re-amortizes what is left over the time that was already remaining, at the rate you already have.
A recast is not a new loan. Your rate does not change, your term does not change, and there is no underwriting, no appraisal and no closing. The servicer simply recomputes the required payment against the smaller balance.
The payoff date stays where it was. What moves is the payment: a permanently lower monthly obligation for the rest of the loan.
What do extra principal payments do instead?
The opposite. The required payment stays exactly where it is, and the loan ends sooner.
An extra principal payment goes straight against the balance. Because the required payment is unchanged, a larger share of every subsequent payment goes to principal too, which compounds — the loan can finish years early on a habit of modest additions.
Nothing about the arrangement is binding. You can pay extra for six months, stop, and resume later, and the only consequence is a payoff date that moves accordingly.
Which one should I choose?
Follow the goal, not the interest saved. They are answers to different questions.
| Recast | Extra principal | |
|---|---|---|
| Required monthly payment | Falls | Unchanged |
| Payoff date | Unchanged | Moves earlier |
| Interest rate | Unchanged | Unchanged |
| Typical cost | A servicer fee, commonly in the low hundreds | None |
| Commitment | One-time, permanent | Stop or resume at will |
| Needs a lump sum | Yes, usually above a minimum | No |
| Availability | Servicer's discretion; often excluded on FHA and VA | Any loan |
Structural differences only. Minimums, fees and eligibility are set by your servicer — confirm before planning around either.
If you want a smaller obligation each month — variable income, a tighter budget, a below-market rate you refuse to give up — the recast is the only instrument that delivers it without refinancing. If you want to be free of the mortgage sooner and keep the flexibility to stop any time, extra payments do that at no cost.
Which is cheaper over your own horizon is not a general fact. It turns on how much money goes in and whether it arrives as one lump sum or a monthly habit, which is what the calculator below is for.
Can you do both?
Yes, and the combination is often what people actually want.
Recast with the lump sum to bring the required payment down, then keep paying the old, higher amount voluntarily. The obligation is lower if you ever need it to be, and the surplus is going to principal in the meantime.
The catch is availability rather than arithmetic. Many servicers require a minimum lump sum, charge a fee, and exclude government-backed loans. Ask your servicer what they offer before deciding which of these you are choosing between.