How a recast works
You make a large payment toward principal, and your servicer recalculates your monthly payment over the remaining term. Your rate and your payoff date stay the same. Only the payment goes down, because it is now spread over a smaller balance.
Servicers that offer recasts often require a minimum lump sum and charge a modest fee. Some servicers don't offer them at all, so ask yours first. A recast is usually quick, with no new application or appraisal.
How a refinance works
A refinance pays off your current loan with a new one. You can choose a new rate, a new term or both. If rates have dropped since you got your loan, a refinance can lower your payment without any lump sum.
A refinance means a new application, credit check and closing. Lenders often charge closing costs, though CapCenter refinances come with ZERO Closing Costs (restrictions apply).
How the numbers compare
Hypothetical example. APR may differ; example only. Rates change daily. Say you owe $300,000 at 7% with 30 years left. A $50,000 recast lowers your principal and interest by about $333 a month and keeps your 7% rate. Refinancing the full $300,000 to a 30-year fixed at 6.25% saves about $149 a month without paying down any principal.
Example details: $300,000 30-year fixed at 7.000% (7.029% APR): 360 monthly payments of $1,995.91; $250,000 30-year fixed at 7.000% (7.029% APR): 360 monthly payments of $1,663.26; $300,000 30-year fixed at 6.250% (6.275% APR): 360 monthly payments of $1,847.15. Principal and interest only; taxes and insurance not included, so the actual payment will be higher. Unless noted, APR assumes ZERO Closing Costs, no discount points and 15 days of prepaid interest. Hypothetical example prepared November 4, 2026, not a current CapCenter rate offer; subject to credit approval.
The recast saves more here, but it ties up $50,000 that you can't easily get back. The refinance keeps your cash in hand for emergencies, repairs or other goals. If you have the cash and rates are lower too, doing both can lower your payment the most.
When a recast is the better fit
A recast makes sense when your rate is already low and you have cash from a home sale, a bonus or an inheritance. You lower your payment and keep the rate you have. It can also suit buyers who closed on a new home before selling the old one.
When a refinance is the better fit
If today's rates are lower than yours, a refinance can cut your payment without a lump sum. It is also the main option if you have an FHA or VA loan, or if you want to change your term.
Which fits you
- Recast: you have cash and you like your rate
- Refinance: today's rates are lower than yours
- Both: pay down your balance and refinance at once
- Neither: if you would rather keep the cash as savings, extra payments over time are another option
