Calculate your savings with our free Mortgage Recast Amortization Calculator. Discover how a lump-sum principal payment can lower your monthly mortgage payments and reduce total interest. Instantly generate a custom amortization schedule to visualize your financial savings without changing your current interest rate or loan term. Try it today!
Mortgage Recast Calculator
What is a mortgage recast?
A mortgage recast is a financial process where a borrower makes a large, lump-sum payment toward the principal balance of their existing mortgage. Upon receiving this payment, the lender recalculates (or "recasts") the remaining loan balance over the remaining term.
- The interest rate stays the same.
- The loan payoff date stays the same.
- The required monthly payment decreases.
This allows homeowners to reduce their monthly financial burden without having to apply for a completely new loan.
How does a recast differ from refinancing?
While both strategies can lower your monthly mortgage payments, they achieve this through entirely different methods. Refinancing replaces your old mortgage, while recasting adjusts your current one.
| Feature | Recasting | Refinancing |
|---|---|---|
| Interest Rate | Stays the same | Changes to current market rate |
| Loan Term | Stays the same | Can be shortened or lengthened |
| Closing Costs | Low (Administrative fee only) | High (2% to 6% of loan amount) |
| New Loan Created? | No | Yes |
What is the minimum lump sum payment required?
Lenders require a substantial lump-sum payment to initiate a recast, as small extra payments only shorten the loan term rather than trigger a payment recalculation. While exact minimums vary by institution, they generally fall into the following categories:
- Flat amount: Usually a minimum of $5,000 or $10,000.
- Percentage: Often 10% or 20% of your current outstanding principal balance.
Additionally, some lenders require you to have held the mortgage for a specific seasoning period, such as 60 or 90 days, before they will approve a recast request.
Does a recast change my current interest rate?
No, a mortgage recast does not change your current interest rate. You will keep the exact same interest rate you locked in when you initially signed your mortgage or when you last refinanced. This makes recasting an incredibly attractive option if you currently hold a favorable, low interest rate but have come into cash and want to lower your monthly expenses.
Will recasting shorten my overall loan term?
No, recasting does not shorten your overall loan term. The final payoff date remains exactly as stipulated in your original loan agreement. Because the remaining timeline and interest rate stay identical, the lender simply takes your new, smaller principal balance and stretches it over the same number of remaining months. This proportional spreading is the mathematical reason your monthly payment drops.
Are there administrative fees associated with recasting?
Yes, most mortgage lenders and servicers charge a nominal administrative fee to process a recast. This fee covers the paperwork and the recalculation of your amortization schedule.
Typically, this fee ranges from $150 to $500. Compared to refinancing, which requires thousands of dollars in closing costs, origination fees, and title searches, the administrative fee for recasting is highly cost-effective. Occasionally, lenders may even waive this fee for borrowers in excellent standing.
Which types of mortgage loans are eligible for a recast?
Not all mortgages qualify for recasting. Eligibility is heavily dependent on the type of loan you hold and who backs it.
- Eligible: Most standard Conventional loans and Jumbo loans.
- Not Eligible: Government-backed loans, including Federal Housing Administration (FHA) loans, Veterans Affairs (VA) loans, and United States Department of Agriculture (USDA) loans.
If you have a government-backed loan, you are generally not permitted to recast and must utilize refinancing if you wish to permanently lower your required monthly payments.
Do I need a credit check or appraisal to qualify?
No, you do not need a credit check, income verification, or a home appraisal to qualify for a mortgage recast. Because you are maintaining your existing loan agreement and simply paying down the principal balance, you are actually lowering the lender's risk. The lender does not need to re-verify your creditworthiness or confirm the current market value of your property. You simply need to have a history of making your payments on time.
How exactly does recasting lower my monthly payment?
Recasting lowers your payment through a process called re-amortization. Here is how it works step-by-step:
- You pay a large lump sum directly toward your principal.
- The lender subtracts this amount from your total outstanding balance.
- The lender takes this new, reduced principal and calculates a new amortization schedule.
- They divide the lower balance across the exact number of months remaining on your loan, applying your original interest rate.
Because there is less principal to pay off over the same amount of time, your required monthly payment shrinks.
Does a mortgage recast reduce the total interest paid?
Yes, a mortgage recast significantly reduces the total amount of interest you will pay over the life of the loan. Mortgage interest is calculated as a percentage of your outstanding principal balance. By wiping out a large chunk of your principal with a lump-sum payment, there is a much smaller balance left for interest to accrue on. Even though your interest rate remains unchanged, the actual dollar amount you pay in interest drops substantially.
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