Mortgage Recast Calculator

How Mortgage Recasting Works

A mortgage recast (also called re-amortization) is when you make a large lump-sum payment toward your principal balance and your lender re-amortizes the loan over the remaining term. The result is a lower monthly payment at the same interest rate, without the closing costs or credit checks of a refinance. Most lenders charge a small recast fee (typically $150 to $500) and require a minimum lump-sum payment, often $5,000 or $10,000.

This calculator takes your current loan balance, interest rate, remaining term, and lump-sum payment to compute your new monthly payment and lifetime savings. The formula uses standard fixed-rate amortization: the new payment is calculated against the reduced balance over the original remaining term.

Recast vs Refinance vs Extra Payments

Recasting is ideal when you already have a low interest rate and simply want a lower monthly payment after receiving a windfall like an inheritance, bonus, or home sale proceeds. Refinancing replaces your loan entirely and only makes sense when rates have dropped significantly. Making extra principal payments without recasting shortens your loan term but keeps your monthly payment the same.

For example, on a $300,000 mortgage at 6.5% with 25 years remaining, a $50,000 recast lump sum drops the monthly payment from about $2,025 to around $1,687 — saving $338 per month and tens of thousands in interest. The same $50,000 as an extra payment without recasting keeps payments at $2,025 but shortens the term by roughly 5 years.

When a Recast Makes Sense

Recasting works best if you have a large sum to deploy, a competitive existing rate, and want cash flow relief rather than a faster payoff. It preserves your loan terms, credit score is unaffected, and there's no appraisal. Not all loans qualify — FHA, VA, and most USDA loans cannot be recast. Conventional conforming loans through Fannie Mae and Freddie Mac typically allow it, but always check with your servicer first.

Running the Numbers Before You Commit

Before making a recast, run three scenarios in this calculator: lump sums at 5%, 10%, and 20% of your balance. Compare the monthly savings against the opportunity cost of investing that cash elsewhere. A 6.5% mortgage rate is effectively a 6.5% guaranteed after-tax return on the recast amount. If you expect higher returns investing, extra payments may not be optimal. But for risk-averse borrowers or anyone seeking monthly cash flow, a recast delivers immediate, guaranteed relief.