If you’re a homeowner looking to lower your mortgage payments without changing your interest rate or loan term, recasting your mortgage might be your best option. A mortgage recast, also called reamortization, allows you to recalculate your monthly payments after making a lump sum payment toward your principal. It’s a smart way to reduce your financial burden without the hassle of refinancing.
Recast Mortgage Payment Calculator
What Is a Mortgage Recast?
A mortgage recast is a financial strategy where you make a large lump sum payment toward the principal balance of your loan, and the lender then recalculates your monthly payments based on the new, reduced loan balance and the remaining term. Unlike refinancing, you keep the same loan, interest rate, and term, but your monthly payment drops significantly.
Key Features of Mortgage Recasting:
- 🔁 Keeps your existing loan
- ✅ Retains your interest rate and term
- 📉 Reduces your monthly payment
- 💸 Requires a lump sum payment
- 💰 May save thousands in interest over time
How to Use the Recast Mortgage Payment Calculator
Using the calculator is quick and user-friendly. Here’s how:
Step-by-Step Instructions:
- Enter Original Loan Amount
Example: $300,000 - Enter Loan Interest Rate (Annual)
Example: 4.5% - Enter Loan Term (Years)
Example: 30 - Enter Number of Months Paid So Far
Example: 60 (for 5 years) - Enter Lump Sum Payment Amount
Example: $25,000 - Click “Calculate”
The Calculator Will Show You:
- 🎯 New monthly mortgage payment
- 📅 Remaining loan term
- 💲 Interest savings
- 📊 Principal and interest comparison
Mortgage Recast Formula (Plain Text)
Once a lump sum is applied, your lender recalculates your monthly payment using this amortization formula:
javaCopyEditMonthly Payment = P × [r(1 + r)^n] / [(1 + r)^n – 1] Where:
P= New loan principal after lump sumr= Monthly interest rate (Annual rate ÷ 12)n= Remaining months in the loan term
This formula helps determine your new reduced monthly payment.
Example Calculation
Let’s look at how recasting can benefit you.
Loan Scenario:
- Original Loan: $300,000
- Interest Rate: 4.5%
- Loan Term: 30 years
- Payments Made: 60 months
- Lump Sum Payment: $25,000
Before Recast:
- Remaining Balance: ~$275,000
- Monthly Payment: ~$1,520
After Recast:
- New Balance: $275,000 – $25,000 = $250,000
- New Monthly Payment: ~$1,380
- Monthly Savings: ~$140
- Potential Interest Savings: Over $15,000
Why Choose a Mortgage Recast Over Refinancing?
| Feature | Mortgage Recast | Mortgage Refinance |
|---|---|---|
| New Loan Needed | ❌ No | ✅ Yes |
| Credit Check | ❌ Not Required | ✅ Required |
| Closing Costs | 💰 Minimal ($150–$500) | 💸 High (2%–5% of loan) |
| Interest Rate Change | ❌ No | ✅ Possible |
| Paperwork | 🧾 Very little | 📄 Extensive |
| Processing Time | ⏱️ Faster (1–4 weeks) | 🕒 Slower (4–8+ weeks) |
A mortgage recast is the better option when:
- You have a low interest rate already
- You want lower payments, not a shorter term
- You want to avoid closing costs
- You have cash available for lump sum
Benefits of Using a Recast Mortgage Payment Calculator
- 📉 Instantly see how lump sum payments lower monthly obligations
- 💡 Plan when and how much to pay to reach goals faster
- 💵 Estimate interest savings across remaining years
- 🧘 Improve peace of mind with more manageable payments
- 🏠 Empower yourself with strategic financial planning
Common Uses for Mortgage Recasting
- 💰 Applying tax refunds or bonuses toward your loan
- 🏡 Selling an investment or rental property and applying the gains
- 🎁 Receiving an inheritance or financial gift
- 🧾 Paying off a chunk after other debt is cleared
- 👩💼 Planning for early retirement or reduced monthly expenses
20 Frequently Asked Questions (FAQs)
1. What is a recast mortgage payment?
It’s a new monthly mortgage payment calculated after a lump sum principal payment.
2. Does recasting reduce my loan term?
No. It reduces monthly payments while the term stays the same.
3. Will my interest rate change?
No. Your original interest rate remains unchanged.
4. How much do I need to recast my mortgage?
Most lenders require a minimum of $5,000–$10,000.
5. Can I recast more than once?
Usually no—most lenders allow a single recast during the loan term.
6. Do all lenders allow recasting?
No. It depends on your lender and loan type.
7. Can I recast FHA or VA loans?
Typically, FHA and VA loans do not allow recasting.
8. Is refinancing better than recasting?
Not always. Recasting avoids closing costs and paperwork.
9. Do I need a credit check for recasting?
No credit check is needed for mortgage recasting.
10. Can I recast with a conventional loan?
Yes, conventional fixed-rate loans are most commonly eligible.
11. How soon will my new payment take effect?
Usually within 30 to 60 days after the lump sum payment.
12. Will my escrow payments change?
No. Escrow for taxes and insurance will remain the same.
13. Does recasting save money in the long run?
Yes. Lower principal = less interest paid over time.
14. What’s the difference between recasting and reamortizing?
They’re the same process—used interchangeably.
15. Will my amortization schedule reset?
Yes, it will be recalculated based on the new lower principal.
16. Can I make extra payments after recasting?
Yes. Extra payments after a recast further reduce interest.
17. Does recasting affect my credit?
No, it has no impact on your credit report.
18. Can I use this calculator for rental properties?
Yes, if your lender allows recasting on investment properties.
19. Is this calculator free?
Yes! It’s completely free and accessible online.
20. Do I need to tell my lender before using the calculator?
No, but you must contact your lender to officially request a recast.
Final Thoughts
Mortgage recasting is an underused but powerful financial tool that helps homeowners reduce their monthly payments without the stress and cost of refinancing. By applying a lump sum toward your loan’s principal and recalculating the payment schedule, you improve your financial flexibility without changing your interest rate or loan structure.