Recast vs extra payments
Your new payment appears once you enter the balance, the rate, the months left, and the lump sum.
- What you pay after a recast.
- What you pay with extra principal.
- Months earlier.
- How much interest you save.
Taxes and insurance (escrow) are billed separately; only principal and interest are included here. Recasting is not allowed on FHA, VA or USDA loans.
01 Recast vs extra payments with the same lump sum
Take a $400,000 balance at 6.5%, 300 months left, a $60,000 lump sum, and a $250 recast fee:
| Option | Recast | Extra principal | Do nothing |
|---|---|---|---|
| Monthly payment | $2,295.70 | $2,700.83 | $2,700.83 |
| Paid off in | 25 years | 17 years 9 months | 25 years |
| Interest left to pay | $348,711 | $232,637 | $410,249 |
| Interest saved after the fee | $61,287 | $177,612 | $0 |
| Fee | $250 | $0 | $0 |
| Fee paid back by the lower payment in | 1 month | No fee | No fee |
The Amortization schedule in Excel lists every payment month by month.
02 Lower payment or an earlier payoff
With a $400,000 balance at 6.5% and 300 months left, a $60,000 recast brings the payment down from $2,700.83 to $2,295.70. Put that amount toward extra principal instead, and $2,700.83 stays the same. The loan ends 87 months sooner and costs $116,074 less in interest than a recast would.
03 Does paying extra principal lower your payment?
Only if you request a recast. Fannie Mae requires extra principal to be applied at once on a current loan. Your servicer does that, and the payment you are scheduled to make stays the same. What the lower balance gives you is an earlier payoff date. Request a recast and your servicer recalculates the payment instead.
04 Recast vs principal prepayment: questions
Does paying extra principal lower your payment?
Not on its own. Your payment stays the same, and the loan finishes earlier. Just a recast turns a lower balance into a lower payment.
Is a recast possible after extra payments?
Yes, often. For Rocket Mortgage, principal payments totaling $10,000 over time are counted; Servbank counts reductions made within a three-month window.
Which option reduces interest more?
Extra principal on its own, since you keep making the larger payment and the balance drops more quickly.