Homeowners are always looking for ways to save money on their mortgage. One often-overlooked strategy is mortgage recasting—a process that can reduce your monthly payments without refinancing your loan. With our Mortgage Loan Recast Calculator, you can quickly estimate how your mortgage will change after making a lump-sum payment toward the principal.
Mortgage Loan Recast Calculator
What Is a Mortgage Recast?
A mortgage recast (also called reamortization) is when you pay a lump sum toward your loan’s principal, and the lender recalculates your monthly payments based on the lower balance — while keeping the same interest rate and loan term.
Unlike refinancing, there’s no credit check or income verification, and your interest rate remains the same. It’s a fast, low-cost way to reduce your monthly burden without the hassles of a new loan.
Benefits of Mortgage Recasting
- ✅ Lower monthly payments
- ✅ No need to refinance
- ✅ Keep your current interest rate
- ✅ Minimal or no closing costs
- ✅ Faster loan payoff with interest savings
Recasting is ideal for homeowners who’ve made a large principal payment and want to take advantage of lower monthly obligations without resetting their loan terms.
How to Use the Mortgage Loan Recast Calculator
This calculator is designed to give you instant insights into how a lump-sum payment will affect your mortgage.
Step-by-Step Instructions:
- Enter Original Loan Amount
Example: $300,000 - Enter Annual Interest Rate
Example: 5% - Enter Original Loan Term (in years)
Example: 30 years - Enter Current Balance
Your remaining principal (e.g., $250,000) - Enter Remaining Term (in months)
Example: 300 months remaining (25 years) - Enter Lump-Sum Payment Amount
Example: $50,000 - Click “Calculate”
Instantly receive:- Your new monthly payment
- Total interest savings
- New amortization schedule
Mortgage Recast Formulas Explained
The calculator uses amortization formulas to recalculate monthly payments after applying a lump-sum principal reduction.
1. Monthly Interest Rate
Monthly Rate = Annual Interest Rate ÷ 12
2. New Loan Balance After Lump Sum
New Balance = Current Balance – Lump-Sum Payment
3. New Monthly Payment
New Payment = New Balance × (r × (1 + r)^n) ÷ ((1 + r)^n – 1)
Where:
r= monthly interest raten= number of months remaining
Example Calculation
Let’s walk through an example:
- Original Loan: $300,000
- Interest Rate: 5%
- Term: 30 years (360 months)
- Current Balance: $250,000
- Remaining Term: 25 years (300 months)
- Lump-Sum Payment: $50,000
Step 1:
New Balance = $250,000 – $50,000 = $200,000
Step 2:
Monthly Rate = 5% ÷ 12 = 0.004167
Step 3:
New Payment =
$200,000 × (0.004167 × (1 + 0.004167)^300) ÷ ((1 + 0.004167)^300 – 1)
≈ $1,169.18
Previous Payment (on $250,000) was ≈ $1,461.98
Monthly Savings = $292.80
Total Interest Savings over time = $87,840 (approx.)
When Is Mortgage Recasting a Good Idea?
Mortgage recasting is a smart strategy if:
- You’ve received a windfall (e.g., bonus, inheritance)
- You want to lower monthly expenses
- You’re keeping your existing mortgage and interest rate
- You don’t want to refinance due to fees or higher rates
- You prefer reducing monthly burden instead of shortening loan term
When Not to Recast
Avoid recasting if:
- You’re planning to refinance at a better rate
- Your lender doesn’t offer recasting
- You want to pay off the loan faster, not just reduce payments
- You need the funds for higher-yield investments
Pros vs. Cons of Recasting
| Pros | Cons |
|---|---|
| Low or no closing costs | Not all lenders offer recasting |
| No credit check required | Doesn’t reduce loan term |
| Keeps your interest rate | May have minimum lump-sum requirement |
| Reduces monthly payment | May be less beneficial if rates drop |
20 Frequently Asked Questions (FAQs)
1. What is mortgage recasting?
It’s when a lump sum reduces your principal and monthly payment, but the interest rate and term stay the same.
2. Does recasting reduce my interest rate?
No. The rate stays the same, but interest paid over time decreases.
3. Is recasting better than refinancing?
It can be if your current rate is favorable and you want to avoid refinance fees.
4. Do all lenders allow mortgage recasting?
No. Not all do. Check with your lender before proceeding.
5. What’s the typical cost of recasting?
Often $100–$500. Some lenders waive the fee.
6. Can I recast more than once?
Some lenders allow it; others may limit frequency.
7. Is there a minimum lump sum for recasting?
Yes, many lenders require $5,000 to $10,000 minimum.
8. Does recasting change my loan term?
No. Only the monthly payment changes.
9. Can I recast a fixed-rate mortgage?
Yes, as long as your lender allows it.
10. Can I recast an FHA or VA loan?
Generally no, but exceptions exist depending on lender.
11. What’s better: recasting or paying extra monthly?
Paying extra monthly reduces term; recasting lowers payment.
12. Do I need to apply for recasting?
Yes, request it through your loan servicer.
13. Does recasting affect credit score?
No. It doesn’t appear on your credit report.
14. Can I invest the lump sum instead of recasting?
Yes, but it depends on your risk tolerance and returns.
15. Can I recast after paying PMI off?
Yes. Recasting may help lower post-PMI payments.
16. What if I sell my home later?
Recasting won’t impact your home’s resale or payoff process.
17. Is recasting available on investment property loans?
It depends on the lender. Some allow it, others don’t.
18. Do jumbo loans allow recasting?
Many do, especially private lenders or portfolio loans.
19. Can I recast an ARM (adjustable-rate mortgage)?
Not usually. Recasting is more common with fixed-rate loans.
20. Does recasting reduce total interest paid?
Yes. You pay less interest since the principal is lowered early.
Final Thoughts
The Mortgage Loan Recast Calculator is a valuable tool for any homeowner looking to lower their monthly mortgage payments without going through the hassle or cost of refinancing. By understanding how a lump-sum payment impacts your loan structure, you can make more informed decisions, improve cash flow, and save thousands over the life of your mortgage.