I made a “mortgage recast calculator” to help readers determine the savings of a mortgage recast versus simply making extra mortgage payments.
This is an important distinction because a loan recast actually slows mortgage repayment.
Despite making a lump-sum payment to reduce your loan balance, a typical requirement to get it approved, the loan recast means future payments are lowered to reflect that extra payment.
Mortgage Recast Calculator
A mortgage recast reduces your monthly payment via a lump-sum principal payment without the need to refinance. Use this free calculator to compare three scenarios side by side and see exactly how much interest you could save.
Enter your loan details below — results update instantly, no submit button needed.
Importantly, the original loan term remains in place as well. So if you took out a 30-year fixed mortgage, paid an extra $25,000, then asked your lender for a recast, your loan term wouldn’t change.
The extra payment would simply alter the amortization schedule so payments are lower for the remainder of the term.
This is generally helpful if you want to get some payment relief, despite paying extra toward your mortgage.
You would still save on interest because of a lower outstanding loan balance, but not as much as you’d save if you made an extra mortgage payment and kept making your original payment. Use the calculator above to see what I mean.
It compares three scenarios side-by-side:
– the original mortgage without any extra payments
– a loan recast after making a lump sum payment
– and the same lump sum payment without a recast
This allows you to quickly determine the savings and decide if it’s better for YOU to recast after paying extra, or simply keep making your original monthly payment.
Or perhaps to not do anything at all!
To use the mortgage recast calculator, simply enter your original loan amount, mortgage rate, loan term, and loan start date.
This will automatically calculate your outstanding loan balance using that date.
Then enter the lump sum payment you wish to make associated with the loan recast (this is typically a requirement to get a recast approved!).
No need to hit enter, the results update instantly if you change any inputs.
From there, you’ll see the three side-by-side scenarios to gauge which might be best for your particular situation.
Paying nothing extra will obviously result in the most interest paid and result in no change to the loan term.
Paying extra then doing a recast will result in less interest paid, a lower monthly payment, but no change in the loan term.
Finally, paying extra but NOT doing a recast will result in the least interest paid AND a shorter loan term to reflect the continued full monthly mortgage payments.
Frequently Asked Questions
What is a mortgage recast?
A mortgage recast reduces your monthly payment based on a new, lower loan balance after making a lump-sum payment toward principal.
You keep the same interest rate and the remaining loan term does not change. The result is a lower monthly payment and some interest savings without the need to refinance.
What is the difference between recasting and refinancing?
Refinancing pays off your existing mortgage and replaces it with an entirely new loan, which results in a new interest rate and a fresh loan term.
Recasting means you keep your existing loan and only your monthly payment is recalculated to reflect the lump-sum principal payment.
Should I recast my mortgage or just make a lump-sum payment?
It depends on your goals. If you want/need a lower monthly payment, recasting is probably the better option.
If you want to pay off your loan as fast as possible and save the most interest, making a lump-sum principal payment without recasting will result in more interest savings AND shorten your loan term.
You can use the calculator above to see both scenarios side by side with your actual numbers.
How much does a mortgage recast cost?
Most loan servicers charge a one-time recast fee, which might be around $250. While there is a cost, it’s far less than the cost of a mortgage refinance, which can run several thousand dollars.
What is the minimum lump sum required to recast a mortgage?
Many lenders require a minimum lump-sum principal payment of $5,000 or more to approve a recast. Otherwise the recast wouldn’t do much to lower future payments.
However, some lenders don’t have a minimum, which can be useful if you’ve paid extra over time and now want a lower monthly payment.
Be sure to contact your loan servicer directly to determine specific requirements.
Can you recast any type of mortgage?
No. Government-backed loans including FHA, VA, and USDA loans are generally not eligible for a recast. But conventional loans, including jumbos and those backed by Fannie Mae and Freddie Mac are.
Is an appraisal or credit check required for a recast?
No. One of the advantages of a recast vs. refinance is there’s typically very little paperwork required, no appraisal needed, and no credit check. But requirements can vary by bank, lender, or loan servicer.
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