Reamortize Mortgage Calculator

When it comes to managing a mortgage, one of the most overlooked yet powerful tools is reamortization. Unlike refinancing, which replaces your current loan, reamortization recalculates your monthly mortgage payments based on your current balance—typically after making a lump-sum payment.

What Is Mortgage Reamortization?

Mortgage reamortization (also known as loan recasting) is a financial strategy that allows you to reduce your monthly mortgage payment by making a lump-sum principal payment. Instead of changing your interest rate or loan term, your lender recalculates your payments based on the new, lower principal balance and the original loan term.

Key Features of Reamortization:

• 🏠 Keeps your original interest rate and loan term
• 💸 Reduces your monthly payment
• 💰 Decreases total interest paid over time
• 📉 Great alternative to refinancing
• 🔁 One-time recalculation, not a new loan

How to Use the Reamortize Mortgage Calculator

Our calculator is designed to help you visualize the potential savings and new payment structure after making a principal payment.

Step-by-Step Instructions:

1. Enter Original Loan Amount
   The total loan amount you initially borrowed (e.g., $300,000)
2. Enter Interest Rate
   Use your current mortgage rate (e.g., 5.00%)
3. Enter Loan Term (in years)
   Example: 30 years, 20 years, or 15 years
4. Enter Months Already Paid
   How many months you’ve been paying the mortgage
5. Enter Lump-Sum Principal Payment
   The amount you plan to pay toward the principal (e.g., $20,000)
6. Click “Calculate”
7. Get Results Instantly:
   • New monthly payment
   • Interest savings
   • Time saved on the loan (if applicable)

Reamortization Formula (Plain Text)

While most lenders use amortization schedules or calculators, the basic formula for a recalculated payment is:

javaCopyEditNew Monthly Payment = P × (r(1 + r)^n) / ((1 + r)^n – 1) 

Where:

• P = Remaining loan balance after lump-sum payment
• r = Monthly interest rate (annual rate ÷ 12)
• n = Remaining number of months in the loan term

Example Calculation

Original Loan Terms:

• Loan Amount: $300,000
• Interest Rate: 5.00%
• Loan Term: 30 years
• Months Already Paid: 60 (5 years)
• Lump-Sum Payment: $30,000

Without Reamortization:

• Remaining Balance ≈ $275,000
• Monthly Payment ≈ $1,610 (Principal & Interest)

After Reamortization:

• New Balance: $275,000 – $30,000 = $245,000
• Remaining Term: 25 years
• New Monthly Payment ≈ $1,434
• Monthly Savings: ≈ $176
• Interest Savings: $15,000–$25,000 (approx., varies by time and rate)

Why Reamortize Instead of Refinance?

Reamortization is best if:

• You’re happy with your interest rate
• You want to reduce payments without resetting the loan
• You have extra cash to pay down principal

When to Consider Reamortizing a Mortgage

• 🔄 After receiving a bonus, inheritance, or settlement
• 🔧 After a home renovation, using leftover funds
• 🎯 When planning for early retirement or budget cuts
• 📉 When seeking lower monthly payments without refinancing
• 🧾 To avoid high refinancing closing costs

Benefits of Using the Reamortize Mortgage Calculator

• ✅ Understand how lump-sum payments affect your loan
• 💵 Plan monthly budget with updated payment
• 💡 Visualize long-term interest savings
• 📊 Compare scenarios instantly (with or without reamortization)
• 🧘 Gain peace of mind with better financial planning

20 Frequently Asked Questions (FAQs)

1. What is mortgage reamortization?

It’s the process of recalculating your monthly mortgage payments after making a large lump-sum payment.

2. Does reamortization change my loan term?

No, the loan term remains the same. Only your payment amount changes.

3. Will my interest rate change?

No, your original interest rate stays the same.

4. How is reamortization different from refinancing?

Reamortization adjusts your payments on the same loan. Refinancing replaces your loan with a new one.

5. Is there a fee for reamortization?

Many lenders charge a small administrative fee (usually $150–$500).

6. Can I reamortize more than once?

Typically no. Most lenders allow only one reamortization during the life of the loan.

7. Is there a minimum payment required?

Yes. Many lenders require a minimum lump-sum of $5,000–$10,000.

8. Does reamortization reduce my loan balance?

Yes. The lump sum directly reduces your principal, and the payments are recalculated.

9. Will I save on interest?

Yes. You’ll pay less interest over time due to the lower principal.

10. Can I shorten my loan term with reamortization?

Not automatically. You would need to continue making higher payments to reduce term.

11. Does this affect escrow or insurance payments?

No, those components of your mortgage remain unchanged.

12. Can I do this on an FHA or VA loan?

Policies vary. Check with your lender—some allow it, some don’t.

13. Do I need good credit for reamortization?

No credit check is typically required.

14. How quickly will my new payment take effect?

Usually within 30 to 60 days after approval and processing.

15. Can I calculate savings before contacting my lender?

Yes! Use this Reamortize Mortgage Calculator to preview your savings.

16. What if I make extra payments instead of reamortizing?

Extra payments help, but they don’t lower your scheduled payment unless you reamortize.

17. Is reamortization available for fixed and adjustable-rate mortgages?

Mostly available for fixed-rate mortgages. Check with your lender.

18. Will this help me qualify for other loans?

Lower payments may improve your debt-to-income (DTI) ratio, aiding qualification.

19. Can this be used for investment property loans?

Sometimes, depending on lender policy.

20. Is this calculator free to use?

Yes! Our Reamortize Mortgage Calculator is 100% free and online.

Final Thoughts

If you're looking for a smart way to reduce your monthly mortgage payments without the complexity and cost of refinancing, reamortization is a simple, effective option. With a one-time principal payment, you can lower your monthly obligation and save big on interest over time.