Mortgage Recast Calculator

About Mortgage Recast Calculator

The Mortgage Recast Calculator tells you exactly what your monthly principal-and-interest payment becomes after a lump-sum principal payment that triggers a re-amortization. Unlike a refinance, a recast keeps your interest rate, your original payoff date, and your loan account number — only the balance and the monthly payment change. Most online calculators stop at the new payment. This one walks the whole decision: how the savings compare to a prepay-only strategy that finishes the loan faster, how a refinance at today's rate would stack up, when the recast servicing fee breaks even, and how the new payment scales with different lump-sum sizes.

What makes this calculator different

How to use the Mortgage Recast Calculator

1. Pick a quick-start scenario — first home, mid-life, windfall, or downsizer — to autofill realistic numbers, or enter your own loan from scratch.
2. In the loan pane, enter your current balance, your original loan term in years (typically 30), the months you've already paid, and your current interest rate.
3. In the recast pane, enter the lump-sum amount you want to apply to principal and the recast servicing fee your lender charges (default $250 if unsure).
4. Optionally, in the refinance pane, type a refinance rate and closing-cost estimate to see how a full refi compares to a recast on the same lump sum.
5. Click Calculate. The headline shows your new monthly P&I; the timeline visualizes the "same finish line, smaller steps" insight; the strategy grid compares all three (or four) paths; the chart plots remaining balance over time; and the sensitivity bars show how the new payment scales with lump-sum size.

The math under the hood

The fixed-rate amortization formula gives you the level monthly payment that pays off a balance \( B \) at monthly rate \( r \) over \( n \) months:

\( \text{PMT} = \dfrac{B \cdot r}{1 - (1 + r)^{-n}} \)

A recast applies a lump sum \( L \) directly to principal, leaving the rate \( r \) and remaining months \( n \) unchanged. The new payment is computed on the smaller balance:

\( \text{PMT}_{\text{recast}} = \dfrac{(B - L) \cdot r}{1 - (1 + r)^{-n}} \)

Because both numerator and denominator use the same \( n \), the payoff date does not change — the monthly bill just shrinks in proportion to how much of \( B \) the lump sum replaced.

For the prepay-only comparison, the lump sum is applied but the monthly payment stays at the original level. The loan finishes early, in \( n^{\star} \) months:

\( n^{\star} = \dfrac{-\ln\left(1 - \dfrac{(B - L) \cdot r}{\text{PMT}_{\text{orig}}}\right)}{\ln(1 + r)} \)

Break-even on the recast servicing fee \( F \) is the number of months of monthly savings needed to recover the fee:

\( \text{break-even} = \left\lceil \dfrac{F}{\text{PMT}_{\text{orig}} - \text{PMT}_{\text{recast}}} \right\rceil \)

Recast vs Prepay vs Refinance — quick decision table

When does recasting beat prepaying?

Both strategies use the same out-of-pocket lump sum. The difference is what you do with the monthly savings after that. If your goal is cash-flow relief now — for example, you want a smaller mortgage bill so you can max out a retirement account, fund tuition, or take on a slower-paying career — recasting wins. If your goal is to minimize total interest and pay the loan off faster, prepay-only wins because every dollar of your unchanged monthly payment after the lump sum goes further toward principal.

There is a hidden third option: recast and then keep paying the original amount. After recasting, voluntarily continue paying your old, higher monthly amount. That gives you the cash-flow safety net of a lower required payment, but you still finish the loan early like prepay-only. The lender will apply the overage to principal automatically. This is the strategy financial planners often recommend for higher-income households.

Common questions about recasting

What is a mortgage recast?

A mortgage recast is a re-amortization. You make a lump-sum payment toward principal and the lender recalculates your monthly principal-and-interest payment over the remaining original term at the same interest rate. The loan is not refinanced and the payoff date does not change, only the monthly payment shrinks.

How is recasting different from prepaying or refinancing?

Prepaying means sending extra money to principal while keeping the same monthly payment. The loan finishes earlier but the monthly bill does not change. Refinancing means replacing the existing mortgage with a new loan at a new rate and term, with full closing costs and underwriting. Recasting sits between the two: a small fee, no underwriting, same rate, same payoff date, but a lower monthly payment.

How much is a mortgage recast fee?

Most US lenders charge a flat servicing fee between $150 and $500, with $250 being typical. The fee is one-time and is paid at the time of the recast. The break-even calculation in the result tells you how many months of monthly savings cover the fee.

What is the minimum lump-sum amount for a recast?

Most servicers require a minimum lump-sum of $5,000 to $10,000 before they will recast. The lump must be applied directly to principal (not to your escrow or to the next month's payment). Confirm the minimum with your servicer before applying funds.

Does a recast change my interest rate?

No. The rate stays exactly the same. If your goal is a lower rate you need to refinance instead. Recast only changes the balance and therefore the monthly amount, not the rate or the term.

Can FHA, VA, or USDA loans be recast?

Generally no. Government-backed loans (FHA, VA, USDA) and most jumbo loans typically cannot be recast. Recast availability is most common on conforming conventional Fannie Mae and Freddie Mac loans. Ask your servicer for written confirmation.

Will a recast hurt my credit score?

No. A recast does not require a new loan application, hard credit pull, appraisal, or underwriting. The account number and terms stay the same. Your credit report sees a lower balance and a lower monthly payment, both of which generally help.

When does a recast make more sense than prepaying?

Recast wins when you want cash-flow relief now, for example to reduce a stretched monthly budget or free up cash for other investments. Prepaying wins when your goal is to minimize total interest and you do not need a smaller monthly payment. The two strategies produce the same final payoff date if you keep paying the original payment after the recast.