Mortgage Recast Calculator United States

What the mortgage recast calculator does

A mortgage recast, also called re-amortization, lets you make a large one-time payment toward principal and have the lender recalculate your monthly payment on the lower balance. The calculator takes your current balance, rate and remaining term, subtracts your lump sum and spreads the smaller balance over the same number of months. You get a lower required payment, the same payoff date and the interest you save over the rest of the loan.

Your rate and remaining term stay the same; only the balance shrinks, so each payment drops. A refinance is different: it is a new loan with a new rate, new closing costs and often a new term.

How the calculation works

The monthly payment comes from the standard amortization formula: the balance times the monthly rate, divided by one minus (1 + monthly rate) raised to the negative number of months. That is the level payment that brings the loan to zero over the remaining term.

The calculator applies it twice, once to your current balance and once to the balance after the lump sum, over the same remaining months. The difference is your monthly saving. It also multiplies each payment by the remaining months and subtracts the balance to get total interest with and without the recast; the gap is your interest saved. Subtracting the recast fee gives the net benefit.

Recast versus refinance versus extra payments

• A recast lowers your monthly payment and keeps your rate and payoff date. It suits someone happy with their rate who wants a lower payment, for example after a bonus, an inheritance or the sale of another property.
• A refinance replaces your loan. It can lower your rate, but it comes with closing costs and a new application, and if rates have risen since you borrowed, it may raise your rate.
• Extra payments, or a one-time principal payment without a recast, keep the payment the same and shorten the term, so you finish sooner and pay less interest without lowering the amount due each month.

A recast is the better fit when monthly cash flow matters most. If you would rather be debt-free sooner and can keep paying the current amount, a principal payment without a recast often saves slightly more interest, because the term shrinks.

When a recast makes sense

Consider a recast when you have a sizeable lump sum, a rate you want to keep and a need to ease your monthly budget. Families expecting a drop in income, such as one partner moving to part-time work or a new child, sometimes recast to lower their fixed costs. Buyers who purchased a new home before selling the old one sometimes recast the new mortgage once the sale frees up cash.

Lenders usually require a minimum lump sum, often several thousand dollars or a percentage of the balance. FHA, VA and USDA loans generally cannot be recast, so the option is most common on conventional loans. Servicers charge a processing fee, which you can include here.

Money put into a recast becomes home equity, which is hard to get back out. If you may need the cash soon, or could earn more elsewhere, keeping the lump sum may be better even with a higher payment.

Reading your results

The main figure is your new monthly payment, shown with your current payment, the monthly reduction, the balance after the lump sum and the interest saved over the remaining term. The chart compares the current and recast payments. Use the net savings figure, which already subtracts the fee, to decide whether the recast is worthwhile.

Your servicer's numbers will depend on your exact balance on the recast date, the timing of your next payment and their rounding. Confirm the final terms with your lender. This tool is for planning and education, not financial advice.

About This Mortgage Recast Calculator

Use this mortgage recast calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.