Extra Principal vs. Recast: Same Cash, Very Different Outcome
One piece of advice most borrowers hear (usually from well-meaning friends and family) is: “Make bi-weekly payments!”
They’re right that paying extra toward your mortgage can be a smart strategy. Done consistently, it can shave years off your loan and save tens of thousands in interest. But here’s the catch: not all extra payments create the same outcome. Let’s break it down.
Ways to Pay Extra Principal
- Add 1/12 to your monthly payment → essentially one extra payment per year.
- Make one lump-sum payment annually → perfect for a tax refund or work bonus.
- Biweekly payments → half payments every two weeks = 13 full payments a year.
All of these reduce your principal faster and cut total interest over time.
What Extra Payments Really Do (and Don’t Do)
Do |
Don’t Do |
| Reduce your balance faster | Lower your monthly payment |
| Save you interest over the life of the loan | Change your rate or loan term |
Enter the Recast
If your goal is to lower your monthly payment (not just shorten your loan), a mortgage recast might be the better tool.
How it works:
- You make a lump-sum payment toward principal
- Your servicer “re-amortizes” your loan with the new, lower balance
- Interest rate and term stay the same, but your monthly payment drops
- Small admin fee applies (varies by servicer)
- Not available on FHA, VA, or USDA loans
When a Recast Shines
- You’ve sold another property and want to apply the proceeds
- You received a bonus or inheritance and prefer lower monthly payments
When Extra Principal Alone Wins
- You want to pay off your loan faster, but don’t need lower monthly payments
- You expect to refinance soon and don’t want to pay a recast fee
Bottom Line
Both strategies are smart—it just depends on your goals:
- Extra principal = pay off sooner, save on interest
- Recast = lower monthly payments, more breathing room
Not sure what your servicer allows? I can check their policies, minimum lump-sum requirements, and fees, and show you how much your payment could drop.
The BankSouth Mortgage Advantage
Experience the speed of ReadyApprove from BankSouth Mortgage, where you can secure conditional approval for conforming loan limits within hours.
With ReadyLoan®, you can make this process even easier. Our digital platform lets you apply, track your loan progress, and submit documents securely—all from your computer or mobile device. You’ll be armed with the confidence to quickly submit an offer, and the seller will see you as a serious, prepared buyer.
Have peace of mind with our FREE one-time rate float-down* and no lender fee refinance options!
When you purchase your home with me at BankSouth Mortgage, you may be able to refinance later with no lender fees.** This program offers flexibility as life changes, with the potential for savings when it matters most.
* One-time float down available on 45-120 day rate locks. Float down must be executed at least 15 days prior to closing and must be at least .125 improvement. ** This offer may change or end at any time without notice. “No Lender Fees” refers to waived origination charges. Eligibility conditions apply. Subject to credit and property approval.
Blog post date: Thursday, September 4, 2025
