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Example data
| Scenario | Original Loan | Rate | Term | Payments Made | Lump Sum | Recast Fee | Expected Outcome |
|---|---|---|---|---|---|---|---|
| Starter | $300,000 | 6.50% | 30 yrs | 24 mo | $25,000 | $300 | Lower payment, same payoff date |
| Mid-loan | $450,000 | 5.25% | 30 yrs | 84 mo | $40,000 | $500 | Noticeable cash-flow relief |
| Near refi alternative | $250,000 | 7.10% | 20 yrs | 36 mo | $60,000 | $250 | Big payment drop, keep rate |
Use these as starting points. Results depend on your current balance and remaining term.
Formula used
The calculator uses the standard fixed-rate amortization payment formula for principal and interest:
- Monthly rate: r = (APR / 100) / 12
- Payment: P = L × [ r(1+r)n ] / [ (1+r)n − 1 ]
- Recast: new loan L′ = remaining balance − lump sum, then recompute P over remaining n′ payments.
Escrow (taxes, insurance, PMI) is shown separately because it is not part of the loan amortization formula.
How to use this calculator
- Enter your original loan amount, interest rate, and term.
- Enter how many payments you have already made.
- Add the lump-sum principal you plan to apply.
- Enter the recast fee from your servicer, if any.
- Click Calculate to compare payments and interest.
- Use CSV or PDF downloads to save your summary.
If you already pay extra monthly principal, add it to estimate a more realistic current balance.
Professional article
Understanding a recast
A mortgage recast applies a lump-sum principal reduction, then recalculates the monthly principal-and-interest payment for many borrowers using the same rate and remaining term. Many servicers require a minimum principal payment and charge a processing fee. Unlike refinancing, a recast usually avoids a new appraisal and closing costs, but it does not change the payoff date unless you also pay extra principal.
Key inputs that move results
The calculator estimates today’s remaining balance from your original loan amount, APR, term, and payments made. Adding an extra monthly principal amount can approximate faster paydown prior to recast. The larger the lump sum relative to the current balance, the more the payment declines. A higher interest rate increases the interest portion, so reducing principal early can produce larger remaining-interest savings.
Payment comparison metrics
After the lump sum is applied, the recast payment is computed over the remaining months. The monthly savings equals the original payment minus the recast payment. If you include escrow items like taxes, insurance, and PMI, the total monthly outflow may not fall as much as principal-and-interest savings. The graph highlights both views to support budgeting decisions.
Fee break-even and timing
The break-even estimate divides the recast fee by monthly principal-and-interest savings, rounding up to whole months. If savings are small or zero, the fee may never pay back. Consider your expected time in the home: if you plan to sell or refinance soon, recovering the fee may be unlikely. For long holding periods, the lower payment can improve liquidity.
How to interpret interest savings
Interest savings here compares remaining interest if you keep paying the original payment versus paying the lower recast payment, both over the same remaining term. Because the recast payment is lower, interest savings may be modest; the main benefit is cash-flow relief. If your goal is to minimize total interest, continuing higher payments or adding extra principal can outperform recasting.
FAQs
1) Does a recast change my interest rate?
No. A recast keeps your existing interest rate and loan type. It recalculates the payment based on the lower principal and the remaining term set by your current note.
2) Will a recast pay off my mortgage sooner?
Not by itself. The remaining term stays the same, so the main change is a lower principal-and-interest payment. Paying extra principal after recast can shorten the payoff.
3) How accurate is the “current balance” estimate?
It’s an estimate using standard amortization from the original loan terms and payments made. If your actual balance differs due to escrow, fees, or irregular payments, enter your real balance by adjusting payments made and extra principal.
4) What does the break-even months number mean?
It estimates how long monthly savings could take to recover the recast fee. If your savings are $40 and the fee is $300, break-even is about eight months.
5) Should I compare recasting with refinancing?
Yes. If market rates are lower, refinancing can reduce payment and interest, but it may add closing costs and restart the term. Recasting is often cheaper, but it keeps the same rate.
6) Why include taxes, insurance, and PMI?
Those items affect your monthly cash outflow even when principal-and-interest changes. Including escrow helps you see the total budget impact, especially if taxes or insurance rise over time.
Practical notes
- A recast reduces the payment, not the payoff date.
- Minimum lump sums and fees vary by lender and loan type.
- If your rate is high, refinancing may still be worth comparing.
- Ask your servicer whether your loan is eligible to recast.