Welcome! You’ve found one of the best mortgage recast calculators online. Use our calculator to quickly and easily estimate your new monthly payment and total interest savings after recasting your mortgage.

A mortgage recast is a great way to save interest and reduce your monthly mortgage payment without going through the paperwork and hassle of a refinance. We’ll explain what a recast is, how it works, and how to use our mortgage recast calculator to estimate your potential savings.

What is a Mortgage Recast?

A mortgage recast (also known as a mortgage reamortization) refers to the process of recalculating your monthly mortgage payment based on a significantly reduced loan balance without changing the interest rate or loan term.

A recast is a great option for homeowners who have a large lump sum of money and could use a lower mortgage payment. Here’s how a recast works:

1. Lump sum payment: You make a large one-time lump sum payment on your mortgage principal balance.
2. Payment recalculation: Your lender recalculates your monthly payment based on the reduced loan balance, existing interest rate, and remaining loan term.
3. Reduced payments: You pay the new reduced monthly payment for the remainder of the loan term.

Most mortgage servicers offer a recast, but the qualifying requirements could differ from one servicer to the next.

Your servicer may have a minimum lump sum requirement and/or may charge a small recasting fee to cover their processing expenses.

A Mortgage Recast Example

To see how a recast can reduce your payment and save interest, let’s check out an example.

Let’s assume you took out a 5.50% 30-year fixed mortgage for $250,000 two years ago. Your mortgage payment (without taxes and insurance) is $1,419/month. Here’s the principal and interest breakdown within your payment:

Principal:	$303.99
Interest:	$1,115.49
Total payment:	$1,419.47

After two years of payments, your mortgage balance is now $243,075.

Let’s also assume you just received a $100,000 inheritance and you want to apply it to your mortgage.

Now, if you simply applied the $100,000 to your mortgage balance (without recasting), your payment wouldn’t change. You would continue paying the same monthly payment, but more would go to your principal balance. Here’s what your new payment breakdown would look like:

Principal:	$763.71
Interest:	$655.76
Total payment:	$1,419.47

As you can see, the interest portion of your payment would be reduced by almost half. Because more of the payment is going to principal, you would pay off your loan in just 11 years.

But what if you want to reduce your monthly payment? That’s where a recast comes in!

Let’s assume you pay your mortgage down by $100,000, then you call your servicer to inquire about a recast. You discover that they will do the recast for a processing fee of just $250, which can be rolled into the loan balance.

According to our recasting mortgage calculator, this is what your mortgage would now look like:

	Before Recast	After Recast
Interest rate:	5.50%	5.50%
Principal balance:	$243,075	$143,325 *
Remaining loan term:	28 years	28 years
Principal & interest payment:	$1,419	$837
Total lifetime interest:	$233,784	$137,982

As you can see, the interest rate and loan term remain the same, but your new payment is $582 less than your original payment. That’s a huge monthly savings!

Yes, you’re still on the same payoff schedule, but you can always make extra payments to pay off the loan faster. However, even if you make no extra payments, the recast saves you about $95,000 in interest over the life of the loan.

Mortgage Recasting vs Refinancing

Now, what about a refinance? Isn’t that a good way to reduce a monthly mortgage payment? Yes, but a refinance doesn’t always make sense.

If you refinanced during or shortly after the COVID pandemic, you probably have an interest rate lower than the rates available today. It probably doesn’t make sense to refinance for a higher rate to reduce your monthly payment.

A refinance also involves closing costs (which can be in the thousands) and a lot of paperwork. A recast involves minimal paperwork and usually costs around $200 to $500.

If you have good interest rate and a large lump sum of cash, a recast is probably the simpler and cheaper way to reduce your mortgage payment.

Here are some situations where a mortgage recast could be a good option:

• The interest rate on your mortgage is lower than current interest rates. A recast enables you to reduce your payments without refinancing for a higher interest rate.
• You have private mortgage insurance (PMI). A recast may help you eliminate private mortgage insurance if your new mortgage balance (after the recast) is less than 80% of the value of your home.
• You’re about to retire. A mortgage recast can help reduce your monthly expenses at retirement.
• You have cash reserves that aren’t earning a good return. If you have a large lump sum of cash that is earning less than you’re paying on your mortgage, you may want to invest it into a recast to reduce your mortgage interest costs.

If you’d like to find out how much you could save with a mortgage recast, check out our mortgage recast calculator at the top of the page.

Mortgage Recast Pros

We’ve covered the advantages of a recast already, but here’s a quick recap:

• Mortgage payment savings – When you recast, your mortgage lender recalculates your monthly payment based on your current interest rate and your new reduced mortgage balance. This results in a lower monthly mortgage payment.
• Interest savings – A reduced mortgage balance results in significant interest savings over the remaining life of your mortgage.
• Easier and cheaper than a refinance – A refinance involves closing costs (which can be in the thousands) and a lot of paperwork. A recast requires minimal paperwork and usually costs around $200 to $500.

Check out our mortgage recast calculator at the top of the page if you’d like to estimate how much a recast could save you.

The Downside of a Mortgage Recast

The one potential downside of a recast is that you lock up a lot of cash in your home. Yes, the lower mortgage payment is nice, but once you convert cash into home equity, it’s no longer liquid.

If you need to have access to your equity, you may want to set up a home equity line of credit (HELOC). A HELOC enables you to borrow against your home equity on a revolving basis (similar to a credit card) at your convenience.

If you’re over the age of 62, you may also want to consider a reverse mortgage. A reverse mortgage enables you to convert home equity into cash without a monthly payment or giving up ownership of your home.

You can structure a reverse mortgage as a line of credit like a HELOC, but you’re not required to make a monthly payment as long as you live in your home and pay your property charges.

How to Calculate a Mortgage Recast

Calculating a mortgage recast is simple. Here are the steps to follow:

1. Calculate Your New Principal Balance. Subtract your paydown amount from your current principal balance.
2. Calculate Your New Monthly Payment. Use a mortgage calculator (you can find one online) to calculate your new monthly payment using your current interest rate, remaining loan term, and the reduced principal balance you calculated in the first step.

As you can see, it’s pretty easy! However, if you don’t want to bother doing the calculations yourself, feel free to use our free recast mortgage calculator at the top of the page. Our reverse loan calculator is fast and simple to use.

How To Use Our Mortgage Recast Calculator

Our mortgage recast calculator is super easy to use, but feel free to refer to the instructions below if you need help.

Step 1 – Balance and Interest Rate

Use the sliders to select the following values on page 1 of the recasting mortgage calculator:

• Current Principal Balance – Select your current mortgage principal balance.
• Annual Interest Rate – Select your current mortgage interest rate.

Once you’ve selected the items above, click the Next button.

Step 2 – Mortgage Payment and Years Left

Use the sliders to select the following values on page 2:

• Current Principal & Interest Payment – Select your current principal and interest payment (not including property taxes and homeowner’s insurance).
• Years Left on the Loan – Select the number of years left on your loan.

Once you’ve entered the above information, click the Next button.

Step 3 – Pay Down Amount and Recast Fee

Use the sliders to select the following values on page 3:

• Lump Sum Pay Down Amount – Select how much you plan to pay down your mortgage as part of the recast.
• Recast Fee – Select how much your lender will charge to process the recast.

Once you’ve entered the information above, click the Next button.

Step 4 – Confirm and Calculate

Confirm the information you’ve entered is correct, then click the Calculate button. The next page will display the mortgage recast calculator results.

Step 5 – Calculation Results

Once the calculator results page loads, you’ll see an estimate of your new loan balance, monthly mortgage payment, and lifetime interest savings.

IMPORTANT: The calculation results are only as good as the information provided. A mortgage recast should always results in a payment reduction and interest savings. If you’re not seeing payment and interest savings in the mortgage recasting calculator results, return to the previous pages and confirm that you’ve entered the correct information.

Frequently Asked Questions