Mortgage Recast Calculator
Calculate how a lump-sum payment can lower your monthly mortgage payment through recasting. Compare recast vs extra payments and see your potential savings.
Loan Details
Most lenders charge $150-$500 for recasting
Results
Monthly Payment
Before Recast
$0
After Recast
$0
Monthly Savings
$0
0.0% reduction
Total Interest Savings
$0
Over life of loan
Break-Even Analysis
Recast Fee
$250
Break-Even Period
1 months
Net Savings
$0
Recast Recommended
You will recover the recast fee within 1 year
Principal Balance Over Time
How Mortgage Recasting Works
Contact Lender
Call your mortgage servicer and ask if they offer recasting and confirm the requirements
Make Payment
Submit your lump-sum payment (typically $5,000 minimum) toward the principal
Pay Recast Fee
Pay the recast fee ($150-$500) for the lender to recalculate your payments
Enjoy Lower Payments
Your new, lower monthly payment takes effect, usually within 30-60 days
What is Mortgage Recasting?
Mortgage recasting, also called re-amortization, is a little-known option that allows you to make a lump-sum payment toward your mortgage principal and have your lender recalculate your monthly payments based on the new, lower balance.
Unlike refinancing, recasting keeps your existing interest rate and loan term. The lender simply re-amortizes the remaining balance over your remaining term, resulting in lower monthly payments.
Key Benefits
- Lower monthly payments without refinancing
- Keep your current interest rate
- No credit check or extensive paperwork
- Minimal fees (typically $150-$500)
- Reduce total interest paid over loan life
When to Consider Recasting
Good Scenarios
- You received a large sum (bonus, inheritance, investment gains)
- Your current interest rate is competitive
- You want lower payments but not a new loan
- You don't want to reset your loan term
- You have at least $5,000-$10,000 to apply
Consider Alternatives If
- Current rates are significantly lower (refinancing may be better)
- Your lump sum would pay off more than 90% of the balance
- You're planning to sell or refinance within 2 years
- Your lender doesn't offer recasting
- You have high-interest debt that should be paid first
Frequently Asked Questions
What's the difference between recasting and refinancing?
Recasting keeps your existing loan, interest rate, and term while lowering your monthly payment after a lump-sum principal payment. Refinancing replaces your entire loan with a new one, potentially with a new rate, term, and extensive paperwork. Recasting has minimal fees ($150-$500) while refinancing typically costs 2-5% of the loan amount.
Do all lenders offer mortgage recasting?
No. Conventional loans from Fannie Mae and Freddie Mac typically allow recasting, but FHA, VA, and USDA loans do not. Additionally, some lenders choose not to offer this service. Contact your mortgage servicer directly to confirm availability.
What are the typical requirements for recasting?
Most lenders require: (1) Minimum lump-sum payment of $5,000-$10,000, (2) Remaining balance of at least $100,000 after the payment, (3) Good payment history with no recent late payments, (4) Conventional loan (not FHA, VA, or USDA), and (5) Payment of recast fee ($150-$500).
Will recasting affect my loan term or interest rate?
No. Recasting maintains your existing interest rate and doesn't extend or shorten your loan term. The lender simply recalculates your monthly payment based on your new, lower principal balance over the remaining term. This is a key difference from refinancing.
Is recasting better than making extra principal payments?
It depends on your goals. Extra principal payments reduce your balance and total interest but don't lower your required monthly payment. Recasting lowers your monthly obligation, freeing up cash flow. If you want flexibility in your budget, recasting is better. If you want to pay off the loan faster, regular extra payments may be preferable.
Can I recast my mortgage multiple times?
Yes, most lenders allow you to recast multiple times during the life of your loan, though you'll need to pay the recast fee each time and meet the minimum requirements. However, some lenders may limit the frequency (e.g., once per year).
How long does the recast process take?
After submitting your lump-sum payment and recast fee, the process typically takes 30-60 days. During this time, the lender recalculates your amortization schedule and processes the paperwork. Your new payment amount will be reflected on your next statement after the recast is complete.
Should I recast or invest the lump sum?
This depends on your interest rate and investment returns. If you can earn a higher return by investing (e.g., 8% in stocks vs. 6.5% mortgage rate), investing may be better financially. However, recasting provides guaranteed "returns" equal to your interest rate through savings, with zero risk. Consider your risk tolerance, other debts, emergency fund status, and whether you value guaranteed savings over potential higher returns.
How the Calculator Works
This calculator uses the standard amortization formula to determine your new monthly payment after recasting. Here's the formula:
New Monthly Payment = P × [r(1+r)ⁿ] / [(1+r)ⁿ - 1]
P = New principal (original balance - lump sum)
r = Monthly interest rate (annual rate / 12)
n = Remaining number of months
Calculation Steps
- Calculate your current monthly payment using the standard amortization formula
- Subtract your lump-sum payment from your current balance to get the new principal
- Recalculate the monthly payment using the new principal and remaining term
- Determine monthly savings by subtracting the new payment from the current payment
- Calculate total interest for both scenarios and determine interest savings
- Compute break-even period by dividing the recast fee by monthly savings
The calculator also generates a complete amortization schedule for both before and after recasting, allowing you to see exactly how your principal balance will decline over time.
Important Considerations
Before You Recast
- •Verify your lender offers recasting and confirm all requirements
- •Ensure you have 3-6 months of expenses in an emergency fund
- •Pay off higher-interest debt (credit cards, personal loans) first
- •Compare potential investment returns vs guaranteed mortgage savings
- •Check if current refinance rates would save more money
Alternative Strategies
- •Make extra principal payments without recasting (pay off loan faster)
- •Refinance to a lower rate if rates have dropped
- •Invest the lump sum if expected returns exceed your mortgage rate
- •Use a combination: recast for lower payments, then add extra payments
- •Consider paying points to reduce rate if refinancing anyway
Recast vs Refinance: Quick Comparison
| Feature | Mortgage Recast | Refinancing |
|---|---|---|
| Typical Cost | $150-$500 | 2-5% of loan amount |
| Credit Check | No | Yes |
| Changes Interest Rate | No (keeps current rate) | Yes (new rate) |
| Changes Loan Term | No | Can change |
| Appraisal Required | No | Usually yes |
| Income Verification | No | Yes |
| Processing Time | 30-60 days | 30-45 days |
| Lump Sum Required | Yes ($5,000+ typically) | No |
| Available For | Conventional loans only | All loan types |
| Best When | You have cash & like your rate | Rates dropped significantly |