Transparent method
The formula
Worked example
Example inputs
How to interpret the result
Recasting lowers the monthly payment on the identical loan by re-amortizing the remaining balance after a lump-sum principal reduction, without changing the interest rate or shortening the term the way a refinance would, which makes it a fundamentally different tool solving a different problem than a full refinance.
Before you rely on it
What to check
Compare recasting's lower payment against a full refinance's potential rate improvement, since the two accomplish genuinely different things and aren't interchangeable options for the identical goal.
The common error
Where people go wrong with mortgage recast calculator
Treating a mortgage recast as equivalent to a refinance. Recasting lowers the payment on the same rate and doesn't shorten the term the way a refinance can, and choosing between them requires knowing which specific outcome is actually wanted.
Sensitivity evidence
How interest rate changes the new monthly payment
| Interest rate | New monthly payment | Monthly payment reduction |
|---|---|---|
| 4.5% | $1,502 | $276 |
| 5.5% | $1,660 | $305 |
| 6.5%worked example | $1,825 | $336 |
| 7.5% | $1,997 | $367 |
| 8.5% | $2,177 | $400 |
Every input, tested
Which input moves the new monthly payment most
| Input | Tested from | To | New monthly payment at each end | Swing |
|---|---|---|---|---|
| Current balance | $288,000 | $352,000 | $1,609 to $2,041 | $432 (24%) |
| Remaining term | 19.0 years | 31.0 years | $2,067 to $1,691 | $377 (21%) |
| Interest rate | 5.5% | 7.5% | $1,660 to $1,997 | $338 (18%) |
| Principal curtailment | $45,000 | $55,000 | $1,859 to $1,791 | $68 (3.7%) |
| Recast fee | $270 | $330 | $1,825 to $1,825 | $0.41 |
Two variables at once
New monthly payment by interest rate and current balance
| Interest rate \ Current balance | $256,000 | $320,000 | $384,000 |
|---|---|---|---|
| 4.5% | $1,147 | $1,502 | $1,858 |
| 5.5% | $1,267 | $1,660 | $2,053 |
| 6.5% | $1,393 | $1,825 | $2,257 |
| 7.5% | $1,525 | $1,997 | $2,470 |
| 8.5% | $1,661 | $2,177 | $2,692 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Current balance | $320,000 |
| Principal curtailment | $50,000 |
| Interest rate | 6.5% |
| Remaining term | 25.0 years |
| Recast fee | $300 |
| New monthly payment | $1,825 |
| Monthly payment reduction | $336 |
Where the inputs come from
Balance is the amount owed now and remaining term is the years left. The principal curtailment is the lump sum you will pay, which servicers often require to be at least a set amount such as $5,000 or $10,000. The recast fee is charged by the servicer and commonly runs a few hundred dollars. The interest rate does not change during a recast, so enter your current note rate.
When the result stops applying
Not every loan can be recast. FHA, VA and USDA loans generally cannot, and some servicers do not offer it. A recast lowers the payment but not the term, so total interest falls less than when the same money is used to shorten the loan while keeping the payment. Check the servicer's minimum lump sum and fee.
What to compare it with
Compare the recast with the alternative of keeping your payment and paying the loan off faster. The recast lowers the payment and keeps the schedule, while continuing the payment shortens the loan and saves more interest. If your priority is monthly cash flow, the recast wins; if it is total cost, the shorter payoff wins. A refinance is a third option, useful only if rates are lower than yours, which the refinance calculator can test.
People also ask
Frequently asked questions
Is a recast the same as a refinance?
No. A recast keeps your existing loan and rate and re-amortizes after a lump payment, with a small fee and no credit check or appraisal.
Does recasting shorten the loan?
No, the term stays the same and the payment falls. Keep paying the old amount if you want to end the loan earlier.
Which loans allow recasting?
Conventional loans often can be recast, at the servicer's discretion and usually with a minimum lump sum. Government-backed FHA, VA and USDA loans generally cannot, so a borrower with one of those needs a refinance instead.