Mortgage Recast Calculator - Calculate Recast Payment Savings

Mortgage Recast Calculator - Calculate Recast Savings

Calculate your mortgage recast savings with our free mortgage recast calculator. See how a lump sum payment reduces your monthly payment and total interest without refinancing.

What is Mortgage Recasting?

Mortgage Recasting (also called loan recasting or re-amortization) is the process of applying a lump sum payment to your mortgage principal balance, then having the lender recalculate your monthly payment over the remaining loan term.

Key Points:

• Lower monthly payment without refinancing
• Keep your existing interest rate
• Keep your original loan term
• Minimal cost (typically $250-$500)
• No credit check or income verification required
• Available for most conventional mortgages

How to Use This Calculator

Step 1: Enter Current Loan Balance

• Check your mortgage statement for current principal balance
• This is the amount you owe before your lump sum payment

Step 2: Enter Current Monthly Payment

• Your current principal and interest payment
• Exclude taxes, insurance, and PMI from this amount

Step 3: Enter Interest Rate

• Your current mortgage interest rate
• Found on your mortgage statement or original loan documents

Step 4: Enter Remaining Loan Term

• How many years left on your mortgage
• Original term (30 years) minus years already paid

Step 5: Enter Lump Sum Payment

• The amount you want to apply to your principal
• Most lenders require minimum $5,000-$10,000
• Cannot exceed your current loan balance

Understanding Your Results

New Loan Balance:

• Current balance minus your lump sum payment
• This is the new principal amount your payment is calculated on

New Monthly Payment:

• Recalculated based on new balance and remaining term
• Same interest rate, same term, lower principal

Monthly Savings:

• Reduction in your monthly payment
• Money you keep in your pocket each month
• More money for other financial goals

Total Interest Saved:

• Total interest you won't pay over the remaining term
• Can amount to tens of thousands of dollars
• Depends on lump sum amount and remaining term

Break-Even Point:

• How long until your monthly savings exceed the recast fee
• Assuming typical $250 recast fee
• Most people break even in 6-24 months

Recast vs. Refinance

Mortgage Recast:

• Cost: $250-$500 fee
• Rate: Stays the same
• Term: Stays the same
• Credit check: Not required
• Income verification: Not required
• Processing time: 2-4 weeks
• Best for: Lowering payment when you have a good rate

Mortgage Refinance:

• Cost: 2-5% of loan amount
• Rate: Can change (higher or lower)
• Term: Can change
• Credit check: Required
• Income verification: Required
• Processing time: 30-60 days
• Best for: Changing rate or term significantly

When to Consider Recasting

Good Candidates for Recasting:

• You received a lump sum (inheritance, bonus, sale of property)
• You have a low interest rate you want to keep
• You want to lower your monthly payment
• You don't want to pay refinancing costs
• Your credit has changed since you got the loan
• You want to reduce your financial obligations

When Refinancing May Be Better:

• Current rates are significantly lower than your rate
• You want to shorten your loan term (15 vs 30 years)
• You want to take cash out (cash-out refinance)
• You want to remove someone from the loan
• Your credit has improved significantly

Recast Requirements

General Requirements:

• Lump sum payment of at least $5,000-$10,000
• Loan must be in good standing
• No recent late payments
• Sufficient equity in the property
• Conventional loans (most FHA/VA don't allow recasting)

Lender Requirements Vary:

• Minimum lump sum: $5,000 is common
• Some lenders allow recasting once per year
• Some allow multiple recasts over the loan life
• Check with your specific lender for their policies

Example Calculation

Before Recast:

• Loan Balance: $350,000
• Interest Rate: 6.5%
• Remaining Term: 25 years
• Monthly Payment: $2,364

Apply $50,000 Lump Sum:

• New Loan Balance: $300,000
• Same Interest Rate: 6.5%
• Same Remaining Term: 25 years

After Recast:

• New Monthly Payment: $2,027
• Monthly Savings: $337
• Break-Even: ~1 month (with $250 fee)
• Total Interest Saved: ~$51,300 over remaining term

Pros and Cons of Recasting

Advantages:

• Lower monthly payment immediately
• Minimal cost compared to refinancing
• No credit check required
• Keep your current interest rate
• Reduce total interest paid
• Simple process with your existing lender
• Build equity faster

Disadvantages:

• Requires significant lump sum payment
• Interest rate doesn't change
• Loan term doesn't change
• Not available for all loan types (FHA/VA)
• Must meet lender minimum requirements
• Tie up cash that could be used elsewhere

How to Recast Your Mortgage

Step 1: Check Eligibility

• Contact your lender to confirm they offer recasting
• Ask about minimum lump sum requirements
• Confirm your loan is eligible

Step 2: Prepare Lump Sum Payment

• Gather the funds for your lump sum payment
• Ensure the payment is ready to transfer

Step 3: Submit Request

• Complete lender's recast application
• Pay any recast fee (typically $250-$500)
• Specify the amount to apply to principal

Step 4: Confirmation

• Receive new payment amount from lender
• Update automatic payment if applicable
• Start enjoying lower payments!