Mortgage Recast Calculator

Looking to adjust your mortgage terms? Use our Mortgage Recast Calculator to see how making a lump sum payment can reduce your monthly payments and shorten your loan term. Enter your mortgage details to find out your new payment schedule and save on interest.

Monthly Interest Rate

monthlyPayment0.33%

Total Number Of Payments

monthlyPayment180.00totalNumberOfPayments

Monthly Payment

monthlyPayment1,257.47totalNumberOfPayments

How to Use This Calculator

1
Enter Your Current Loan Details
Input your remaining balance, interest rate, and remaining term.
2
Enter the Lump-Sum Payment
Input the amount you plan to pay toward the principal for the recast.
3
Enter the Recast Fee
Input the fee your lender charges (typically $150-$500).
4
Compare Before and After
See your current payment vs. the new recast payment and the reduction amount.

Example Calculation

A homeowner who received an inheritance and wants to recast their mortgage.

Current Balance

$310,000

Interest Rate

5.75%

Remaining Term

24 years

Lump-Sum Payment

$75,000

Recast Fee

$250

Result

Current monthly payment: $2,027. New balance after lump sum: $235,000. New recast payment: $1,537. Monthly savings: $490. Total interest savings: $106,400 over the remaining term.

Tips

Recast vs. Refinance

Recasting costs only $150-$500 and keeps your existing rate, while refinancing costs $5,000-$15,000 and may change your rate. Recast is better when you like your current rate.

Minimum Amounts Apply

Most lenders require a minimum lump sum of $5,000-$10,000 for a recast. Check with your servicer for their specific requirements.

Not All Loans Qualify

FHA and VA loans generally cannot be recast. Most conventional loans can, but confirm with your lender before planning.

Understanding the Mortgage Recast Process

A mortgage recast calculator is a valuable tool for homeowners looking to lower their monthly mortgage payments and reduce the total interest paid over the life of their loan. Recasting allows you to make a lump sum payment towards your mortgage's principal balance, which can significantly affect your monthly payment and overall financial health.

How Does Mortgage Recasting Work?

When you recast your mortgage, you make a substantial payment toward the principal, which lowers the remaining balance. The lender then recalculates your monthly payment based on this new, lower balance, while keeping the interest rate and remaining loan term the same. This process can lead to significant savings in interest payments over time.

The calculation behind a mortgage recast involves several key inputs:

Current Mortgage Balance: This is the amount you still owe on your mortgage.
Current Interest Rate: The rate at which you're currently borrowing money.
Recast Principal Payment: The lump sum payment you plan to make.
New Loan Term: The duration over which you want to pay off the remaining balance.
Number of Payments Per Year: Typically, this is 12 for monthly payments.

Key Factors That Affect Your Mortgage Payment

Each input plays a crucial role in determining your new monthly payment after recasting. Here’s how they interact:

Current Mortgage Balance: The higher your balance, the more you can benefit from a lump sum payment. For example, if your balance is $200,000 and you make a $30,000 payment, your new balance is $170,000.
Current Interest Rate: A lower interest rate means less interest accrual over time. If your rate is fixed at 4%, this remains the same after recasting, which is beneficial for long-term planning.
Recast Principal Payment: The more substantial the lump sum you can afford to pay down, the more significant your monthly savings. For instance, paying down $30,000 can reduce your monthly payment considerably compared to a smaller payment.
New Loan Term: Opting for a shorter term, such as 15 years instead of 30, can lead to higher monthly payments but significantly lower total interest costs.
Number of Payments Per Year: The standard is usually 12, but some homeowners might choose to make bi-weekly payments. This can affect how quickly you pay down the principal.

When to Consider Recasting Your Mortgage

Recasting is ideal in several scenarios:

When You Have Extra Cash: If you've received a financial windfall, such as an inheritance or bonus, applying that to your mortgage can yield immediate benefits.
Interest Rates Are Favorable: If your current mortgage rate is favorable, recasting can be a smart move compared to refinancing.
Desire to Lower Monthly Payments: If your finances have become tighter, reducing your monthly obligations can provide much-needed relief without losing your existing interest rate.
Long-Term Homeowners: If you plan to stay in your home for many years, recasting may save you significantly on interest payments over time.

Common Mistakes When Recasting Mortgages

Not Calculating Long-Term Savings: Some homeowners underestimate the long-term financial benefits of recasting. Always run the numbers to see potential interest savings.
Ignoring Fees: Certain lenders charge fees for recasting. Be sure to understand any costs associated with the process to determine if it’s worth your while.
Not Understanding Terms: Switching loan terms can complicate your financial situation. Ensure that you are comfortable with the new payment amounts and the duration of the loan.

Mortgage Recast vs. Refinancing

While both options aim to reduce monthly payments and overall interest, they function differently. Recasting maintains your current mortgage terms while recalculating based on a lower principal, whereas refinancing involves taking out a new loan, potentially at a different interest rate. Recasting can be less complex and costly than refinancing, making it an attractive option for many homeowners.

Putting Your Numbers to Work

Once you've calculated your new mortgage payment, consider comparing it to your budget to ensure it fits your financial goals. You might also want to explore related calculators such as the Mortgage Affordability Calculator or Debt Consolidation Calculator. These tools can help you further manage your finances and make informed decisions about your mortgage and overall financial health.

Frequently Asked Questions

What is a mortgage recast?

A mortgage recast is when you make a large lump-sum payment toward your principal and the lender recalculates your monthly payment based on the reduced balance while keeping the same interest rate and remaining term. Your monthly payment decreases, but the term stays the same.

How is recasting different from refinancing?

Recasting lowers your payment by reducing the principal without changing the rate or term, and costs only $150-$500. Refinancing creates a new loan with potentially different terms and rate, and costs 2-5% of the loan amount in closing costs. Recasting is simpler and cheaper.

How much do I need to pay for a recast?

Most lenders require a minimum lump-sum payment of $5,000 to $10,000 for a recast. The larger the payment, the greater the reduction in your monthly payment. For example, a $50,000 lump sum on a $300,000 balance at 6% could reduce your payment by about $300 per month.