Mortgage Recast Calculator
Mortgage Recast Calculator
What Is a Mortgage Recast?
A mortgage recast (or re-amortization) occurs when you make a large lump-sum payment toward your mortgage principal, and your lender recalculates your monthly payments based on the new, lower balance. The interest rate and the remaining loan term stay exactly the same.
How It Works
The standard amortization formula is used again: M = P[r(1+r)^n] / [(1+r)^n - 1]. The new principal (P) is the old balance minus your lump-sum payment. The interest rate (r) and number of remaining payments (n) do not change.
Understanding Your Results
This calculator shows your new, lower monthly payment and compares your total interest costs before and after the recast. The net savings figure subtracts your lump-sum payment and any recast fees from the total amount you would have paid without recasting.
Key Factors
The biggest factor is the size of the lump-sum payment. Lenders usually require a minimum lump sum (such as $5,000 or $10,000) to qualify for a recast. Additionally, most lenders charge a small administrative fee, typically between $250 and $500.
Advanced Features
Our Advanced Options allow you to input the recast fee charged by your specific lender. This ensures that the net savings calculation is 100% accurate, taking all your out-of-pocket expenses into account.
Practical Examples
Suppose you inherited $50,000 and want to lower your monthly expenses. If you owe $250,000 at 6.5% with 20 years left, recasting lowers your monthly payment from $1,863 to $1,491, giving you an extra $372 per month in cash flow.
Tips & Best Practices
Not all mortgages qualify for recasting. FHA and VA loans typically cannot be recast. Always ask your servicer if they allow recasting and what their specific requirements are before making a large lump-sum payment.
Benefits
Recasting is an excellent alternative to refinancing if you already have a low interest rate. You avoid the high closing costs associated with a refinance, keep your low rate, and still benefit from a lower monthly payment.
Frequently Asked Questions
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