Mortgage recast calculator

What these numbers mean

A recast takes your reduced balance and spreads it over the payments you had left, at the rate you already had. The payment falls because the balance did, and the finish line stays exactly where it was.

The alternative keeps your current payment against the smaller balance. The extra above what is now required goes to principal every month, so the loan clears early and costs less in total.

Keeping the payment always saves more interest. That is arithmetic. What it does not do is give you back any monthly flexibility, and a recast does. If your income is variable, or you want the option of that money each month, the lower required payment has real value that does not appear in an interest total.

This page shows both and chooses neither.

How this is calculated

Both figures use the standard amortising payment: M = P x i(1+i)^n / ((1+i)^n - 1), where P is the balance, i the monthly rate and n the number of payments left.

• The recast payment is that formula applied to the balance after the lump sum, over the same number of months remaining.
• The alternative reduces the balance by the same lump sum and then amortises at the original payment until it clears, which happens early.
• Interest is calculated monthly on the opening balance and rounded to whole cents, and the final payment absorbs the rounding so the schedule lands exactly on the maturity month.

Neither figure includes property tax, homeowners insurance, HOA dues or mortgage insurance. Those are real money and they are not principal and interest. Folding them in would produce a "payment" that matches nothing on any document you hold, which is why this page keeps them out and says so.

Recasting itself is governed by your servicer's policy rather than by statute: no rule obliges a lender to offer it. What is governed is the disclosure around your mortgage, under Regulation Z, 12 CFR 1026, and the Consumer Financial Protection Bureau publishes a glossary of mortgage terms, including amortisation and the loan features this page depends on. The arithmetic above is the standard amortisation formula, which is mathematics rather than regulation.

What this does not account for

• The recast fee. Servicers typically charge a few hundred dollars. Small against the numbers here, but not zero.
• Whether your loan is eligible. Recasting is discretionary and is generally unavailable on FHA, VA and USDA loans. There is usually a minimum lump sum too.
• Escrow. Your actual monthly bill includes taxes and insurance, which a recast does not change.
• PMI. A large principal payment may take you below the thresholds where mortgage insurance can be removed, which is a separate saving not counted here.
• What else the money could do. Higher-rate debt, an emergency fund, or an employer retirement match may all beat paying down a mortgage. This page compares two uses of the lump sum, not every use.

Questions

What is the difference between a recast and a refinance?

A recast keeps your existing loan. You pay a lump sum against the principal and the servicer recalculates the monthly payment over whatever term was left, at the same interest rate. A refinance replaces the loan entirely with a new one at a new rate and a new term, with full closing costs. A recast typically costs a few hundred dollars in an administrative fee; a refinance costs thousands.

Does a recast shorten my mortgage?

No, and that is the defining feature. The maturity date does not move. The balance falls and the payment falls with it, but you finish on the same date you would have. If you want to finish sooner, pay the lump sum against principal and keep making the old payment instead. This page shows what that alternative saves.

Which is better, recasting or keeping the payment?

They answer different questions. Keeping the payment always saves more interest and clears the loan sooner, which is arithmetic. Recasting lowers your required monthly outlay, which matters if cash flow is tight or your income is uncertain. This page shows both figures and does not choose between them, because the right answer depends on your circumstances.

Will my lender let me recast?

Not always. Recasting is at the servicer’s discretion and is generally unavailable on FHA, VA and USDA loans. Where it is offered there is usually a minimum lump sum, often 5,000 or 10,000 dollars, a minimum resulting principal reduction, and an administrative fee. Ask your servicer before planning around it.

Do I need to tell the servicer the payment is for principal?

Yes, for the alternative shown here. A payment sent without instructions is often applied to the next scheduled payment or held in suspense rather than reducing principal. Designate it as principal-only, in writing, and check the next statement to confirm it was applied that way.