Mortgage Recast Calculator

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mortgage recast calculator
Calculate New Monthly Payment
Result Summary:
Enter values and click Calculate to see your new monthly payment.
function calculateRecast(){var balance=parseFloat(document.getElementById('balance').value);var rate=parseFloat(document.getElementById('rate').value);var term=parseFloat(document.getElementById('term').value);var lumpSum=parseFloat(document.getElementById('lumpSum').value);var fee=parseFloat(document.getElementById('recastFee').value);if(isNaN(balance)||isNaN(rate)||isNaN(term)||isNaN(lumpSum)||isNaN(fee)){alert('Please enter valid numerical values.');return;}var monthlyRate=rate/100/12;var months=term*12;var oldPayment=(balance*monthlyRate*Math.pow(1+monthlyRate,months))/(Math.pow(1+monthlyRate,months)-1);var newPrincipal=balance-lumpSum;var newPayment=(newPrincipal*monthlyRate*Math.pow(1+monthlyRate,months))/(Math.pow(1+monthlyRate,months)-1);var monthlySavings=oldPayment-newPayment;var totalCostOfRecast=fee;var breakEvenMonths=fee/monthlySavings;var resultHTML='
';resultHTML+='

New Monthly Payment: $'+newPayment.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2})+'

';resultHTML+='

Current Monthly Payment: $'+oldPayment.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2})+'

';resultHTML+='

Monthly Savings: $'+monthlySavings.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2})+'

';resultHTML+='

New Principal Balance: $'+newPrincipal.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2})+'

';if(document.getElementById('steps').checked){resultHTML+='
';resultHTML+='

Details:
';resultHTML+='- To "break even" on the recast fee of $'+fee+', it will take '+Math.ceil(breakEvenMonths)+' months.
';resultHTML+='- This calculation assumes your interest rate and remaining term remain identical.
';resultHTML+='- Total principal reduction: $'+lumpSum.toLocaleString()+'

';}resultHTML+='
';document.getElementById('answer').innerHTML=resultHTML;}

Calculator Use

A mortgage recast calculator is an essential tool for homeowners who have come into a significant amount of cash—such as an inheritance, bonus, or proceeds from a home sale—and want to lower their monthly mortgage obligations without the costs or interest rate changes associated with refinancing. This calculator helps you visualize exactly how a lump sum principal payment will reduce your monthly "Principal and Interest" (P&I) payment.

To use this calculator effectively, you will need your most recent mortgage statement to find your current balance and interest rate.

Current Loan Balance
The remaining amount you owe on your mortgage today, not including escrow for taxes or insurance.
Annual Interest Rate
The fixed interest rate currently applied to your loan.
Remaining Term
The number of years left until your loan is fully paid off (e.g., if you are 5 years into a 30-year loan, enter 25).
Lump Sum Payment
The extra amount you plan to pay toward your principal balance during the recast process.
Recast Fee
Most lenders charge a flat administrative fee for recasting, typically ranging from $200 to $500.

How It Works

Unlike a refinance, a mortgage recast (also known as a loan re-amortization) does not replace your old loan with a new one. Instead, your lender takes your new, lower principal balance and "re-calculates" your monthly payments based on the original interest rate and the time remaining on your original loan term.

The formula used to calculate the new monthly payment (M) is the standard amortization formula:

M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]

  • P = The new principal balance (Current Balance – Lump Sum)
  • i = The monthly interest rate (Annual Rate / 12 months)
  • n = The total number of months remaining in the term

Calculation Example

Example: Let's say you have a mortgage with a $300,000 balance at a 5% interest rate. You have exactly 20 years (240 months) remaining. Your current monthly P&I payment is approximately $1,979.87. You receive a $50,000 bonus and decide to recast.

Step-by-step solution:

  1. New Principal: $300,000 – $50,000 = $250,000
  2. Monthly Interest: 0.05 / 12 = 0.0041667
  3. Remaining Months: 20 years × 12 = 240 months
  4. Calculation: $250,000 [ 0.0041667(1 + 0.0041667)^240 ] / [ (1 + 0.0041667)^240 – 1 ]
  5. New Payment: $1,649.89
  6. Monthly Savings: $1,979.87 – $1,649.89 = $329.98

Common Questions

What is the difference between recasting and refinancing?

Refinancing involves applying for a completely new loan, paying closing costs (2-5% of the loan amount), and potentially getting a new interest rate and a new 30-year term. Recasting keeps your existing loan, rate, and term, but lowers your monthly payment after a large principal reduction. It is much cheaper and easier than refinancing.

Does recasting save me money on interest?

Yes, but specifically because you reduced the principal. Simply paying the $50,000 extra without recasting would save you the same amount of interest (and actually pay off the loan years earlier). The primary benefit of the recast is the improved monthly cash flow by lowering the required monthly payment.

Can all mortgages be recast?

No. Most conventional loans (Fannie Mae and Freddie Mac) allow recasting, but government-backed loans like FHA, VA, and USDA loans generally do not. Additionally, some jumbo loans or private lenders may have specific restrictions or minimum lump sum requirements (often $5,000 or $10,000).

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