Mortgage Recast Calculator

A recast starts with a lump-sum payment toward principal: an inheritance, a bonus, proceeds from selling another property, or savings set aside for the purpose. Once the balance is lower, the servicer re-amortizes what is left over the months remaining on the loan. Because the same smaller balance is spread over the same number of months, the required monthly payment falls.

Two things pointedly do not change. The interest rate stays exactly where it was, which is the whole appeal when your existing rate is better than anything a new loan would offer today. And the payoff date stays where it was: a recast lowers the payment, it does not shorten or lengthen the loan. Nothing about the loan is re-underwritten the way a new loan would be, though the servicer still has to agree to the recast and usually charges a fee for the paperwork.

That fee, the minimum lump sum, and whether your loan type can be recast at all are set by your servicer, not by any general rule. This calculator takes the fee as your input for that reason. Enter the figure on your servicer's quote rather than an average you read somewhere, because the averages hide how much servicers differ.

Pay extra principal and stop there. The payment stays the same, the loan ends early, and the interest saving is the largest of the three options. In the worked example, keeping the $2,233.37 payment after the $50,000 lump sum pays the loan off in 192 months instead of 264 and saves $112,558.86 of interest. Choose this when the current payment is comfortable and the goal is to be done sooner.

Recast. The payment falls, the rate and payoff date stay, and the interest saving is real but smaller, because the smaller balance is deliberately stretched back over the full remaining term. Choose this when the goal is a lower required payment: a job change, a move to one income, or simply more room in the monthly budget, without surrendering a good rate.

Refinance. A new loan replaces the old one, so both the rate and the term can change, at the cost of a full application and closing costs. A refinance is the only one of the three that can lower the rate itself. If current rates are below yours, run the numbers on the refinance calculator and compare its break-even against the recast fee here. If current rates are above yours, a refinance gives up the rate you already hold, and the recast is usually the cleaner lever.

One caution applies to all three: money paid into the house as a lump sum is no longer liquid. A recast lowers the required payment, but it cannot return the lump sum if an emergency follows. Keep the reserve decision separate from the payment decision.

Nothing in a standard mortgage note guarantees a recast. Servicers offer recasting as a service, on their own conditions: many require the loan to be current, set a minimum lump-sum amount, limit how often a loan can be recast, and charge a processing fee. Government-backed loans are the big exception class: most FHA and VA loans cannot be recast at all, because the insurer or guarantor's rules do not provide for re-amortization.

The order of operations matters. Ask the servicer first, in writing, whether your loan is eligible, what the minimum lump sum and fee are, and how long processing takes. Make the lump-sum payment only after that confirmation, and confirm whether it must be a single payment rather than several smaller ones. A lump sum paid before eligibility is confirmed still reduces your balance and interest, but it cannot be pulled back if the servicer then declines the recast.