Mortgage Recast Calculator

What is a mortgage recast?

A mortgage recast is a way to lower your required monthly principal-and-interest payment after making a lump-sum payment toward your loan principal. Your lender recalculates the payment using the smaller balance, your current interest rate and the same remaining term.

A recast changes your payment, not your interest rate or payoff schedule. It differs from refinancing, which replaces your existing mortgage with a new loan. Whether you can recast, what it costs and how the lender handles the request depend on your loan and servicer.

Why a mortgage recast matters

A lower required payment can free up room in your monthly budget. You might use that cash flow for savings, home repairs, childcare or other expenses. The tradeoff is that you give up cash now to reduce the loan balance, so consider whether you will still have enough savings for upcoming costs.

A recast can also reduce the interest you pay over the remaining loan term because the balance being amortized is smaller. It does not automatically shorten the term. If your goal is to pay off the home sooner, ask your servicer whether you can keep paying more than the new required amount.

Compare the estimated payment change with the lump sum and recast fee. The fee is a separate cost; the calculator shows it but does not subtract it from the monthly payment savings. Ask your servicer to confirm its requirements and the exact payment before making a decision.

How to use this mortgage recast calculator

1. Enter your current mortgage balance, not the original amount you borrowed.
2. Enter your current interest rate and the months remaining on your loan. Check your latest mortgage statement or contact your servicer if you are unsure.
3. Enter the lump-sum principal payment you are considering. The calculator uses it to estimate the reduced balance.
4. Enter the recast fee quoted by your servicer. If you do not know the fee, ask before relying on the estimate.
5. Review the new monthly payment, monthly savings and interest saved. The estimate assumes the lower balance is re-amortized over the same remaining term at the same rate.

Mortgage recast calculator example

How to read your mortgage recast results

The new monthly payment is the estimated principal-and-interest payment after the balance is reduced and re-amortized. It does not include any other charges that may appear in your mortgage bill, such as escrow for property taxes or homeowners insurance.

Monthly savings is the difference between the current principal-and-interest payment and the estimated new payment. Interest saved estimates the difference in interest over the remaining term under the calculator’s assumptions. It is not the same as money saved immediately, and it does not account for the recast fee as a reduction in interest savings. Compare the fee and the cash you will use with the payment and interest estimates before you proceed.

Ways to make a recast work better for you

1. 01

   Keep enough cash available

   Before committing a lump sum, set aside money for planned repairs, bills and emergencies. A lower payment may help your monthly budget, but cash used to reduce principal is no longer available for other needs.

2. 02

   Ask your servicer for the full terms

   Confirm that your loan can be recast, the fee, any minimum lump-sum requirement and how to submit the payment. Ask when the new payment will take effect and whether the lump sum must be applied specifically to principal.

3. 03

   Match the choice to your goal

   If you need more room in your monthly budget, focus on the new required payment. If you want to reduce total interest or pay off the mortgage sooner, ask how continuing to make extra principal payments would affect your plan.

4. 04

   Compare alternatives before sending money

   Ask your lender to explain the recast alongside other options, such as keeping the current payment after making a principal payment or refinancing. Compare costs, payment changes, rates and loan terms using your actual offers.

Common mortgage recast mistakes

• Using the original loan amount

  The calculator needs your current balance. Using the amount you borrowed at closing can make the new payment estimate inaccurate.

• Expecting a lower rate or faster payoff

  A recast uses the same rate and remaining term. It lowers the payment by recalculating it from the smaller balance; it does not itself change either of those loan terms.

• Treating payment savings as total savings

  The lower payment is not the same as the net financial benefit. Consider the lump sum, recast fee, interest estimate and what else you could do with the cash.

• Forgetting other mortgage costs

  The result is for principal and interest. Check your full mortgage bill and ask your servicer how a recast affects the amount you must pay each month.

The mortgage recast formula

Key terms

Mortgage recast

A recalculation of your mortgage payment after a lump-sum principal payment, using the same rate and remaining term.

Principal

The amount you owe on the mortgage, separate from interest and other costs.

Re-amortize

Recalculate scheduled payments so they repay a loan balance over a set remaining term at a set interest rate.

Principal and interest (P&I)

The part of a mortgage payment that pays down the loan balance and covers interest. It does not include other bill items such as escrow.