Reference formulas and worked examples below keep their stated units. Monetary examples use USD; dimensional examples use US customary units unless labeled otherwise. Metric calculator inputs are converted to these reference units before calculation. Choosing another currency does not convert example amounts or exchange money.
How to use this mortgage recast calculator
The recast keeps the interest rate and remaining term, then recalculates principal and interest on the smaller balance. The comparison applies the same lump sum but keeps the original scheduled payment.
How the calculation works
First reconstruct the current scheduled payment from the balance, fixed rate and remaining term. Subtract the same immediate principal lump sum for both comparison paths.
Recast path: calculate a new scheduled payment for the reduced balance over the original remaining term at the same rate. Extra-payment-only path: keep the old scheduled payment and let the smaller balance pay off earlier.
Monthly interest and payments are rounded to cents. A final payment is capped at the amount due and adjusted at the stated final month to clear a cent-rounding remainder.
Total cash for recast = lump sum + cash recast fee + remaining recast payments. Total cash without recast = the same lump sum + payments at the original amount. Their difference includes the fee and any extra interest from paying principal down more slowly.
Worked example
At 0%, a 120,000 balance with 120 months left has a 1,000 payment. Paying 24,000 now leaves 96,000. Recasting it over 120 months lowers the payment to 800. Keeping the 1,000 payment clears it in 96 months. With a 250 cash recast fee, recasting costs 120,250 in total cash versus 120,000 for the extra-payment-only path; both have zero interest.
Limits and assumptions
This is a fixed monthly model with interest rounded to cents. Daily balance calculations, payment dates, changing rates, promotions, taxes and jurisdiction-specific contract rules are not inferred. This is a hypothetical eligible recast, not an approval check. No servicing minimums, eligibility rules, refinancing, rate changes, escrow adjustment, PMI cancellation, prepayment penalties or tax effects are inferred. The old payment is reconstructed; an actual lender’s current payment can differ. A full-balance lump sum pays off the loan rather than requiring a recast.
Frequently asked questions
How is recasting different from refinancing?
This model keeps the existing rate and remaining term and changes the payment after principal is reduced. Refinancing replaces the loan and can change its rate, term and costs.
Why compare the same lump sum without recasting?
It separates the benefit of reducing principal from the additional choice to lower the required payment. Keeping the larger payment usually clears the debt sooner.
Will the tax and insurance payment decrease?
Not automatically. Results here are principal and interest; property tax, insurance and other ownership costs are separate.
Can every mortgage be recast?
No. Servicer and loan rules vary. Check eligibility, the minimum principal payment and fees rather than interpreting this estimate as permission.
What if the lump sum pays the entire balance?
Both paths have no remaining loan payments. Any recast fee still entered is shown as an extra cash cost; paying off a loan normally makes a recast unnecessary.
References
Fannie Mae: principal curtailment and recasting over the remaining term