How is a recast different from refinancing?

A recast keeps your existing interest rate and term but lowers the payment by re-amortizing after a lump-sum principal payment. A refinance replaces the loan with a new rate and terms and often has closing costs.

Do all lenders allow mortgage recasts?

No. Many conventional loans allow recasts for a fee; FHA/VA/USDA and some jumbo or portfolio loans may not. Check with your servicer first.

Will my escrow payment change after a recast?

Escrow (taxes/insurance) is separate and can change based on annual analyses. This tool only models principal and interest.

Does a recast shorten my term?

A standard recast keeps the original maturity date. It lowers the payment; you can still pay extra to shorten the term.

Is a recast worth it if rates are lower now?

If market rates are lower, compare recasting to refinancing. Recasting is cheaper and easier but won’t lower your rate; refinancing can lower the rate but includes closing costs.

finance calculator

Mortgage Recast Calculator

Apply a lump-sum payment to reduce your mortgage payment and estimate interest saved.

Results

New monthly payment: $1,824 USD
Payment reduction: $189 USD
Balance after recast: $290,000 USD
Interest saved (est.): $26,620 USD

How to use this calculator

Enter your remaining mortgage balance and interest rate.
Add the lump-sum you plan to pay and the remaining term in years.
Optionally enter your current monthly payment for an exact comparison.
Review the new payment, payment drop, and estimated interest saved.

Inputs explained

Remaining balance: Your current principal balance before applying a lump sum.
Lump-sum payment: Cash you’ll apply to reduce principal in the recast.
Interest rate (APR): Your existing loan’s annual rate; recasts keep the same rate.
Remaining term (years): Years left on your current amortization schedule.
Current monthly payment (optional): What you pay now; we’ll compute it if left blank.

How it works

We subtract the lump sum from your remaining balance, then recalculate the payment over the same remaining term and rate.

If you enter your current payment, we use it for the comparison; otherwise we compute the baseline payment from the remaining balance, rate, and term.

Interest saved compares total remaining interest before vs after the recast (approximate).

Formula

Payment = (P × r) / (1 − (1 + r)^(-n))
New balance = Remaining − Lump sum
Interest saved ≈ (Old payment × n − Remaining) − (New payment × n − New balance)

When to use it

Planning a recast after a bonus, inheritance, or home sale proceeds.
Comparing recast vs extra monthly payments for cash-flow relief.
Estimating whether a recast is better than refinancing fees and closing costs.
Checking how much interest you might save by recasting early in the term.

Tips & cautions

Confirm your servicer’s recast fee and minimum lump-sum requirements before sending funds.
If cash flow is the goal, recasting can drop the payment without resetting the rate or term.
Compare to refinancing if market rates are meaningfully lower than your current rate.
Assumes the rate and term stay the same; ignores escrow changes and prepayment penalties.
Interest saved is an approximation and doesn’t model future extra payments or rate changes.

Worked examples

$320k remaining, $30k lump sum, 5.75% APR, 25 years left

Baseline payment ≈ $1,965
New payment ≈ $1,781
Payment drop ≈ $184
Interest saved ≈ $25k

$250k remaining, $40k lump sum, 6.0% APR, 20 years left

Baseline payment ≈ $1,791
New payment ≈ $1,505
Payment drop ≈ $287
Interest saved ≈ $29k

Deep dive

Use this mortgage recast calculator when you have a lump sum and want lower payments without a full refinance. By re-amortizing the remaining balance over the same term and rate, a recast trades cash today for monthly relief and interest savings.

It’s popular after selling a prior home, receiving a bonus, or paying down principal with windfalls. Enter your balance, lump sum, rate, and remaining term to see the new payment and an estimated breakeven versus keeping the cash.

FAQs

How is a recast different from refinancing?: A recast keeps your existing interest rate and term but lowers the payment by re-amortizing after a lump-sum principal payment. A refinance replaces the loan with a new rate and terms and often has closing costs.
Do all lenders allow mortgage recasts?: No. Many conventional loans allow recasts for a fee; FHA/VA/USDA and some jumbo or portfolio loans may not. Check with your servicer first.
Will my escrow payment change after a recast?: Escrow (taxes/insurance) is separate and can change based on annual analyses. This tool only models principal and interest.
Does a recast shorten my term?: A standard recast keeps the original maturity date. It lowers the payment; you can still pay extra to shorten the term.
Is a recast worth it if rates are lower now?: If market rates are lower, compare recasting to refinancing. Recasting is cheaper and easier but won’t lower your rate; refinancing can lower the rate but includes closing costs.

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For planning only. Recast availability, fees, and servicer rules vary. Not financial advice.