Required payment today
$2,279.65
On a $320,000 balance at 7.24% with 312 months left, applying a $50,000 lump sum and refinancing to 6.24% is worth $25,017 after five years — $3,285 more than applying the lump sum alone and $15,115 more than refinancing alone.
Assumptions this tool makes. The loan is fixed-rate and amortised in equal monthly payments; the payment shown is principal and interest only, so it excludes property tax, homeowners insurance and mortgage insurance. The refinance is modelled as a new 30-year loan at the rate entered, with closing costs paid in cash at closing. The recast is modelled as a re-amortisation of the reduced balance over the months already remaining, with the fee paid in cash. Every path is scored as cash in hand minus balance owed at the end of the horizon, which is the position if the balance is settled at that point. The page does not model points paid to buy the refinance rate down, nor any investment return on the cash that a lower payment frees up.
| Path | Required payment | Balance at the horizon | Cash in hand | Better than doing nothing |
|---|---|---|---|---|
| Do nothing | $2,279.65 | $294,859 | -$86,779 | $0 |
| Recast: same rate, same term | $1,923.46 | $248,787 | -$115,657 | +$17,194 |
| Lump sum, keep the payment | $2,279.65 | $223,127 | -$136,779 | +$21,732 |
| Refinance at the new rate | $1,968.21 | $298,644 | -$73,093 | +$9,902 |
| Refinance and apply the lump sum | $1,660.68 | $251,980 | -$104,641 | +$25,017 |
| Horizon | Recast | Apply the cash, keep the payment | Refinance alone | Refinance and apply |
|---|---|---|---|---|
| 1 year | +$3,348 | +$3,743 | -$1,836 | +$1,268 |
| 2 years | +$6,895 | +$7,765 | +$1,246 | +$7,415 |
| 3 years | +$10,388 | +$12,089 | +$4,236 | +$13,431 |
| 5 years | +$17,194 | +$21,732 | +$9,902 | +$25,017 |
| 7 years | +$23,728 | +$32,872 | +$15,074 | +$35,916 |
| 10 years | +$32,930 | +$52,909 | +$21,673 | +$50,685 |
The five rows differ in exactly one respect each: whether the balance falls, whether the required payment falls, whether the rate falls, or none of them. A recast changes the balance and the payment and leaves the rate and the payoff date where they are. A refinance changes the rate and the payment and puts a new 30-year clock in place of whatever was left of the old one. Applying the cash alone changes only the balance, because the required payment stays exactly where it was.
All five rows start from the same position: you hold the lump sum and you owe the current balance. On the paths that do not apply the money, the lump sum stays in hand and is counted there; on the paths that do apply it, the money leaves your hand and the balance falls instead. Because both sides of that swap are counted, the opening position cancels and the differences between rows are real differences, not artefacts of where the cash was booked.
Five years out, the default figures put refinancing and applying the cash first at $25,017, applying the cash alone second at $21,732, a recast third at $17,194, and a refinance on its own last at $9,902.
The recast is the row that surprises people. It cuts the required payment from $2,279.65 to $1,923.46 — $356.20 a month — and still finishes $4,538 behind applying the same money and leaving the payment alone. That gap is the price of the lower payment: the balance is now being repaid more slowly, so interest accrues on more of it for longer, and the fee is on top.
Applying the cash alone wins among the three single moves because it attacks the balance and leaves the schedule intact. Nothing about the monthly obligation changes, so nothing about the pace of repayment changes either — the loan simply ends sooner, and every month of that shorter life is a month of interest not paid.
The order of the five rows changes with how long you keep the loan, and the changes are large enough to reverse the answer rather than just reshuffle it.
At one year the refinance is $1,836 behind doing nothing: the closing costs have not been recovered and the new loan has barely amortised. By two years it is $1,246 ahead. Refinancing and applying the cash overtakes applying the cash alone at five years, $25,017 against $21,732. Apply the cash alone and it retakes the lead by ten, $52,909 against $50,685.
That last reversal is the 30-year clock at work. A refinance restarts amortisation, so the early years of the new loan are almost all interest; an owner who keeps the 26 years already in place repays principal faster every month, and after a decade the lower balance outweighs the lower rate. The longer the loan runs past the crossover, the more the reset costs.
A recast never leads at any horizon on these figures, but it is not the worst of the five either. Its value is not in the score — it is a payment the owner can meet, bought at a price the table puts a number on, and that is a different question from which path makes the most money.
A refinance a full percentage point below the current rate still finishes last of the four active paths, and the reason is the clock rather than the rate.
The default figures charge $5,000 of closing costs and reset 312 remaining months to 360. The rate cut takes the payment to $1,968.21, which is $311.44 less than today, but the balance after five years is $298,643 — higher than the $294,859 the owner would owe by doing nothing, because the new schedule repays principal more slowly than the old one did. The savings are real; they are just smaller than the slower amortisation costs.
Two things move the answer. A larger rate cut helps, and so does a longer remaining term: a borrower with 29 years left gives up almost nothing by restarting the clock, while a borrower with 22 years left trades seven years of amortisation for the lower rate. An owner who refinances should also apply the cash if the cash exists — that is the first row in the table, and it wins.
Four assumptions sit behind every row, and three of them would help the paths with the lowest required payment.
Yes, and on the default figures it is the best of the five rows: $25,017 better than doing nothing after five years, $3,285 ahead of applying the cash alone. The mechanics are ordinary. The refinance closes on the reduced balance, so the cash is applied at or before closing and the new loan never includes it. The closing costs are paid either way.
A recast costs a few hundred dollars where a refinance costs several thousand, but it does not lower the rate and it does not shorten the loan — it lowers the required payment by spreading the smaller balance over the same months. If the goal is a monthly obligation you can meet, a recast is the cheaper way to get one. If the goal is the smallest total cost, applying the money without recasting beats it, and refinancing with the money applied beats both.
Closing costs come out of the first year's savings. On the default figures the rate cut saves $311.44 a month, which is $3,737 over twelve months against $5,000 of closing costs, and the new 30-year schedule also repays less principal than the old one would have. The one-year position is $1,836 behind doing nothing, and it turns positive during the second year.
The measure is built for that case, because it is cash in hand minus the balance owed, which is what a sale settles. Selling sooner shrinks every row's advantage and adds selling costs that fall equally on all five, so the ranking holds while the amounts get smaller. A short holding period hurts the refinance most, because its costs are paid up front and its savings arrive monthly.
Then the refinance rows move, and in opposite directions depending on which way the rate goes. At the same rate as today, a refinance is a pure cost: closing costs out, and a 30-year clock in exchange for nothing. At two points below, the refinance alone overtakes the recast well before five years. The rate is an input here for exactly that reason.
Refi vs Recast vs Prepay Calculator lists each external figure it uses once, with the publisher that issues it and the date it was retrieved. The calculator takes these as its defaults, so any of them can be replaced with a number of your own; a figure that is not in the list is one this page did not take from anywhere.
| Figure | Value | Published by | Retrieved |
|---|---|---|---|
| 30-year fixed mortgage national average | 7.24% | Freddie Mac Primary Mortgage Market Survey (PMMS) | 2026-11-02 |
| Recast fee used as the default on the recast calculator | $250 | Bankrate, What is mortgage recasting? | 2026-10-09 |
Values are the ones this page is built with, not a live feed. Where a figure is revised on a schedule, the retrieval date above is when it was read, and the next scheduled refresh is shown at the top of the page.
Related calculatorsRecast calculator · Extra payment calculator · Refinance break-even calculator
Cluster us/mortgage · Unit us-mortgage-refi-vs-recast-vs-prepay · Engine amortizing-loan / path-compare · Method: Each path is run month by month to the horizon. The payment on the existing loan is the fixed-rate amortising payment on the current balance over the months remaining. A recast recomputes that payment on the reduced balance over the same remaining term and charges its fee as cash out. A refinance replaces the loan with a new 30-year schedule at the quoted rate and charges closing costs as cash out. The combined path refinances the reduced balance and charges the same closing costs. Every row is scored as cash in hand minus the balance still owed at the end of the horizon; the lump sum counts as cash in hand on the paths that do not apply it — including the one that does nothing — so all five start from the same position. The reduction is the difference between a row's score and the score of doing nothing.