Calculator
Recast vs Extra Payment vs Refinance
Recasting lowers the payment but saves the least interest. Paying it straight off the principal saves the most but frees up nothing until the end. Refinancing changes the rate and charges you for it. Investing it instead does nothing to the loan at all. These outcomes are measured in different units, which is why every calculator online models exactly one of them — so this simulates all four month by month against a single shared horizon and reports what each is actually worth.
What to do with the money
Enter your balance, rate, remaining term and the lump sum you have, then press Calculate.
Your mortgage
The balance and the remaining term are both on your statement. Between them they determine your payment, which is shown back to you in the results — if it doesn't match your statement to within a few dollars, the term is probably out.
Enter principal and interest only. Escrowed property tax and insurance are real costs, but they are unaffected by every option here, so including them would move all four answers by the same amount and change nothing.
What you still owe today
What the money could earn instead
This is the most consequential number on the page. Paying a mortgage down is a guaranteed return equal to its rate — there is no forecast involved, no sequence risk, and no tax on it. This figure is what that guarantee is being measured against.
Use an after-tax figure. A 7% return in a taxable brokerage account is not 7% to you, and comparing a pre-tax return against a mortgage rate quietly biases every answer here toward investing.
What the money would make if you invested it instead
Every option below deploys the same lump sum on the same day, and whatever an option does not spend on the mortgage each month is invested at this rate. That is what lets a lower payment, a shorter term and a lower rate be compared as one number instead of three.
Recast terms
Recasting — sometimes called re-amortizing — applies your lump sum to the balance and recalculates the payment over the term that was already left. Same rate, same payoff date, permanently smaller payment. No credit check and no appraisal, because it is the same loan.
Most lenders charge a one-off fee of $150–$500 and require a minimum lump sum of around $5,000. Many borrowers have never heard of it; some loans — FHA, VA, and most USDA — cannot be recast at all.
Typically $150–$500
Often around $5,000
Refinance terms
There is deliberately no “roll the costs into the loan” option, because it is not a real choice. Paying $6,000 of costs from your lump sum leaves $6,000 less against the principal; borrowing them adds $6,000 to it. Either way the new loan starts at the same figure and you pay interest on the same amount.
Watch the term. Resetting a loan with 28 years left back to 30 lowers the payment partly by stretching it, and can raise total interest even at a lower rate. The comparison below catches that; a payment-only comparison does not.
Points, origination, title, appraisal — everything the new loan charges
For educational purposes only. Results are estimates and do not constitute financial, tax, or legal advice. Consult a qualified professional before making any financial decisions.
How to use it
Take the balance, the rate and the remaining term off your latest statement. The tool derives your payment from those three and shows it back to you — if it doesn't match the statement to within a few dollars, the remaining term is almost always the input that's out.
Then enter the lump sum. Every option deploys the same money on the same day, which is what makes the four comparable at all: the difference between them is what happens to the rate, the term and the payment, not how much cash goes in.
The last input is the one that decides the answer. Paying a mortgage down is a guaranteed return equal to its rate. The expected after-tax return is what that guarantee is being measured against, so use a figure you'd be comfortable defending, and use an after-tax one.
Press Example to load a worked case: $380,000 left at 6.75%, with $60,000 to deploy.
What recasting is
Recasting — or re-amortizing — is the option most borrowers have never heard of. You hand the lender a lump sum, they apply it to the balance, and they recalculate your payment over the term that was already left. Same rate, same payoff date, permanently lower payment.
There is no credit check, no appraisal and no underwriting, because it is the same loan it always was. Lenders typically charge a one-off fee of $150–$500 and want a minimum lump sum of around $5,000.
It saves the least interest of the three moves, because it lowers what you pay each month rather than shortening the loan. What it buys is cash flow — which is worth a great deal to somebody whose income is uncertain, and very little to somebody whose isn't.
FHA, VA and most USDA loans cannot be recast at all. Check with your servicer before planning around it.
Why one shared horizon
The four options produce answers in different units. Recasting frees up $310 a month. Extra principal saves $94,000 of interest. Refinancing does a bit of both and charges $6,000 for it. Investing does nothing to the loan. None of those figures can be compared to any of the others.
So every option is simulated month by month over the same period — whatever is left of your existing loan — with a side fund that absorbs the difference. Whatever an option doesn't spend on the mortgage that month gets invested. When a loan is paid off early, the whole freed payment starts going in for every month that remains.
At the end, each option is worth its side fund less anything still owed. Every path has spent exactly the same cash to get there, so that single figure is a fair comparison — and the month where one line crosses another is a real break-even, not the “months to recoup your closing costs” number a refinance quote gives you.
Assumptions and limits
- Fees are netted against the lump sum before it reaches the principal. Paying a refinance's closing costs in cash and borrowing them into the new loan are the same trade, so the tool offers no choice between them — it would be a control that changed nothing.
- Escrowed property tax and insurance are left out. They are real money, but every option here affects them identically, so including them would shift all four answers by the same amount.
- A side-fund return is a forecast; a mortgage paid down returns its rate for certain. The chart draws them on one axis because it has to, but they are not the same kind of number, and the gap between the lines is the price of that risk rather than free money.
- Not modeled: private mortgage insurance, the mortgage interest deduction, prepayment penalties, adjustable rates, or a refinance you would not actually qualify for.
- An estimate for planning. Not financial advice, and not a substitute for someone looking at your actual loan.