Managing a mortgage is often a long-term financial commitment, but there are ways to ease the burden without refinancing. One such method is mortgage recasting, a strategy that can significantly reduce your monthly mortgage payments with a one-time principal payment.
Recasting Mortgage Calculator
What Is Mortgage Recasting?
Mortgage recasting (also called loan recasting) is a process where you make a large, one-time payment toward your loan’s principal, and your lender recalculates the monthly payments based on the new, lower balance, while keeping your original interest rate and loan term unchanged.
Unlike refinancing, recasting does not involve taking out a new loan, dealing with credit checks, or paying significant closing costs.
Key Features:
- Keeps original interest rate and loan term
- Reduces monthly principal and interest payment
- Minimal fees compared to refinancing
- Saves money on long-term interest
- Ideal for borrowers who have extra cash and want lower monthly payments
How to Use the Recasting Mortgage Calculator
Our calculator is easy to use and gives instant results. Here’s a step-by-step guide:
Step-by-Step Instructions:
- Enter Your Original Loan Amount
Example: $350,000 - Enter Annual Interest Rate
Example: 4.25% - Enter Original Loan Term (Years)
Example: 30 - Enter Number of Payments Already Made (Months)
Example: 60 - Enter Lump Sum Payment Amount
Example: $30,000 - Click “Calculate”
The Calculator Will Show:
- New monthly payment
- Remaining loan balance
- Interest savings
- Total payment reduction over the life of the loan
Mortgage Recasting Formula (Plain Text)
The formula used to recalculate mortgage payments after a principal payment is:
javaCopyEditMonthly Payment = P × [r(1 + r)^n] / [(1 + r)^n – 1] Where:
P= New loan principal after the lump sum paymentr= Monthly interest rate (annual rate divided by 12)n= Remaining loan term in months
This gives your new monthly principal and interest payment based on the updated balance and term.
Example Calculation
Let’s say you took a $350,000 mortgage at 4.25% for 30 years and have paid for 5 years (60 months). Now you want to apply a $30,000 lump sum and recast the loan.
Before Recasting:
- Remaining balance after 60 months: ~$320,000
- Monthly payment: ~$1,722 (principal & interest)
After $30,000 Lump Sum:
- New balance: $290,000
- Remaining term: 25 years
- New monthly payment: ~$1,561
- Monthly savings: ~$161
- Interest savings over 25 years: $20,000+ (approx.)
Recasting vs Refinancing
| Feature | Recasting | Refinancing |
|---|---|---|
| Credit Check | ❌ No | ✅ Yes |
| New Loan Created | ❌ No | ✅ Yes |
| Interest Rate Change | ❌ No | ✅ Possible |
| Closing Costs | 💲 Low ($150–$500) | 💸 High (2%–5% of loan) |
| Paperwork | 🧾 Minimal | 📄 Extensive |
| Time to Process | ⏱️ 2–4 weeks | 🕒 4–8 weeks or more |
Recasting is ideal when:
- You’re satisfied with your current rate
- You want lower monthly payments
- You want to avoid the complexity and cost of refinancing
Benefits of Mortgage Recasting
- ✅ Lower Monthly Payments: Enjoy a lower financial burden each month
- ✅ Minimal Fees: Most lenders charge only a small administrative fee
- ✅ No Credit Impact: Unlike refinancing, no credit check is involved
- ✅ Preserve Low Interest Rate: Especially valuable in rising rate environments
- ✅ Faster Payoff if Desired: You can continue to pay more and reduce your term informally
When to Consider Recasting
- After receiving a bonus, tax refund, or inheritance
- After selling a second home or investment property
- To lower monthly expenses during retirement or income changes
- To free up cash flow for other financial goals
- When avoiding refinancing due to high rates or closing costs
20 Frequently Asked Questions (FAQs)
1. What is mortgage recasting?
Recasting is recalculating your monthly payments after making a one-time principal payment.
2. Does recasting change my interest rate?
No, your rate remains the same.
3. Will the loan term change?
No. The term stays the same unless you choose to pay extra monthly.
4. Is recasting the same as refinancing?
No. Refinancing creates a new loan; recasting adjusts the current loan.
5. Do all lenders allow recasting?
No. Check with your lender—some may not offer this option.
6. How much must I pay to recast?
Many lenders require a lump sum of $5,000–$10,000 minimum.
7. Are there fees involved?
Yes, typically a small fee ($150–$500).
8. Can I recast an FHA or VA loan?
Most FHA, VA, and USDA loans do not allow recasting.
9. Is recasting available for fixed-rate mortgages?
Yes, it’s most common with conventional fixed-rate loans.
10. Will it affect escrow payments?
No. Escrow for taxes and insurance stays unchanged.
11. How soon will my new payment take effect?
Usually within 30–60 days after your lump sum is processed.
12. Can I recast more than once?
Most lenders allow only one recast per loan.
13. Will recasting help with early loan payoff?
Not directly, but lower payments can free up funds for extra payments.
14. Does recasting affect my credit?
No. It’s a neutral action that doesn’t involve credit bureaus.
15. What’s the difference between prepaying and recasting?
Prepayment lowers your balance but keeps payments the same. Recasting lowers the monthly payment.
16. Is recasting good for investment properties?
It depends. Some lenders may allow it for rental or investment loans.
17. Do I need to qualify?
Usually not—just meet the lender’s lump sum and paperwork requirements.
18. Can I continue making extra payments after recasting?
Yes, and doing so will help you pay off the loan even faster.
19. Will this calculator give accurate results?
Yes, it provides close estimates based on standard amortization formulas.
20. Is the calculator free to use?
Absolutely! Our Recasting Mortgage Calculator is free and available 24/7.
Final Thoughts
Mortgage recasting is a simple, powerful strategy for homeowners who want to reduce their monthly payments without the complexities of refinancing. It’s especially helpful if you already have a good interest rate and some extra money you can apply to your mortgage.