Question 1

What is a mortgage recast and how does it work?

Accepted Answer

A mortgage recast is when you make a large lump sum payment toward your mortgage principal, and your lender recalculates your monthly payments based on the new lower balance. Unlike refinancing, the interest rate and loan term remain the same, but your monthly payments are reduced. Most lenders require a minimum payment of $5,000-$10,000 and charge a small recast fee.

Question 2

What's the difference between mortgage recasting and refinancing?

Accepted Answer

Mortgage recasting keeps your existing loan terms (rate, term) but reduces payments after a lump sum payment. Refinancing replaces your entire loan with a new one, potentially changing the rate, term, and payment. Recasting typically costs less ($150-$500 vs. thousands for refinancing) and doesn't require credit checks or income verification.

Question 3

When does mortgage recasting make financial sense?

Accepted Answer

Recasting makes sense when you have extra cash, want to reduce monthly payments, have a good interest rate you want to keep, and don't want the hassle of refinancing. It's ideal if you received a windfall (inheritance, bonus, home sale proceeds) and want to improve cash flow while keeping your current loan terms.

Question 4

How much can I save with a mortgage recast?

Accepted Answer

Savings depend on your balance, interest rate, remaining term, and lump sum amount. For example, a $50,000 payment on a $300,000 balance at 4.5% with 25 years remaining could save about $300+ monthly and $75,000+ in total interest over the loan term. Use our calculator to see your specific savings potential.

Question 5

What are the requirements for mortgage recasting?

Accepted Answer

Requirements vary by lender but typically include: minimum lump sum payment ($5,000-$10,000), current loan must be in good standing, conventional or conforming loans (FHA, VA, and USDA loans usually don't allow recasting), and payment of a recast fee. Some lenders have restrictions on how soon after origination you can recast.

Question 6

Are there any downsides to mortgage recasting?

Accepted Answer

Potential downsides include: you lose liquidity by putting cash into your home, opportunity cost if you could invest the money for higher returns, you don't reduce the loan term (still pay for the same number of years), and not all loan types are eligible. Consider your overall financial picture and emergency fund needs before recasting.

Question 7

How to calculate mortgage recast savings?

Accepted Answer

To calculate mortgage recast savings: 1) Calculate original monthly payment using PMT = P × [r(1+r)ⁿ] / [(1+r)ⁿ - 1], 2) Subtract lump sum from balance to get new principal, 3) Calculate new monthly payment with reduced principal, 4) Subtract new payment from original to get monthly savings, 5) Calculate total interest saved over remaining term, 6) Subtract recast fee for net savings. Example: $300K balance, $50K payment, 4.5% rate, 25 years = $277/month savings, $82,850 total savings. Our calculator automates these calculations.

Question 8

How do you calculate mortgage recast?

Accepted Answer

To calculate mortgage recast: 1) Determine new principal balance (current balance - lump sum payment), 2) Use amortization formula: PMT = P × [r(1+r)ⁿ] / [(1+r)ⁿ - 1] where P = new principal, r = monthly rate, n = remaining payments, 3) Calculate original payment with old balance, 4) Calculate new payment with reduced balance, 5) Monthly savings = original payment - new payment, 6) Total interest saved = (original payment × months) - (new payment × months) - lump sum, 7) Net savings = total interest saved - recast fee.

Question 9

What is mortgage recast vs refinance?

Accepted Answer

Mortgage recast vs refinance: Recast keeps your existing loan (same rate, same term) but reduces payments after lump sum. Refinance replaces entire loan with new terms. Recast costs $150-$500 vs. $2,000-$5,000 for refinance. Recast requires no credit check, no income verification, no appraisal. Refinance can change rate/term but requires full underwriting. Recast ideal if you have good rate and want lower payments. Refinance better if rates dropped significantly or you want different term.

Question 10

How much does mortgage recast reduce payment?

Accepted Answer

Mortgage recast payment reduction depends on lump sum amount, interest rate, and remaining term. Example: $50,000 payment on $300,000 balance at 4.5% with 25 years remaining reduces payment from $1,665 to $1,388 (17% reduction, $277/month savings). Larger lump sums create bigger reductions. Higher interest rates mean more savings. Longer remaining terms amplify savings. Use our calculator to see your specific payment reduction potential.

Question 11

What is a mortgage recast payment calculator?

Accepted Answer

A mortgage recast payment calculator computes your new monthly payment after making a lump sum principal payment. Enter current balance, interest rate, remaining term, lump sum amount, and recast fee. The calculator shows: New monthly payment amount, Payment reduction (dollars and percentage), Monthly savings, Total interest savings over loan term, Break-even period, Net savings after fees. Use it to evaluate if recasting makes financial sense for your situation.

Question 12

What is a lump sum mortgage payment calculator?

Accepted Answer

A lump sum mortgage payment calculator determines how a large one-time payment affects your mortgage. Enter current balance, interest rate, remaining term, and lump sum amount. The calculator shows: New monthly payment after lump sum, Payment reduction amount, Total interest savings, Impact on loan term (if paying extra vs. recasting). Note: Lump sum payments can either reduce payments (recast) or shorten term (extra payment), depending on lender options.

Question 13

What is a mortgage recast savings calculator?

Accepted Answer

A mortgage recast savings calculator estimates total savings from recasting your mortgage. Enter loan details (balance, rate, term), lump sum payment amount, and recast fee. The calculator computes: Monthly payment reduction, Total interest savings over remaining term, Break-even point (when savings offset fee), Net savings after fees, Percentage savings. Use it to compare recasting with other options like investing the money or refinancing.

Question 14

What is a reduce mortgage payment calculator?

Accepted Answer

A reduce mortgage payment calculator shows ways to lower your monthly mortgage payment. Options include: Mortgage recasting (lump sum reduces payment), Refinancing (new rate/term), Extending loan term, Removing PMI. Enter your current loan details and the calculator shows payment reduction options, costs, and savings. Recasting is often cheapest way to reduce payments if you have cash available and want to keep your current rate.

Question 15

What is mortgage recast interest savings?

Accepted Answer

Mortgage recast interest savings is the total interest you avoid paying over the remaining loan term after recasting. When you make a lump sum payment, your principal balance decreases, so you pay less interest over time. Example: $50K payment on $300K balance at 4.5% with 25 years remaining saves approximately $83,100 in interest over the loan term. Higher lump sums, higher interest rates, and longer terms create more interest savings.

Question 16

What is a mortgage recast break even calculator?

Accepted Answer

A mortgage recast break-even calculator determines how long it takes for monthly savings to offset the recast fee. Enter monthly payment reduction and recast fee. Break-even = Recast Fee ÷ Monthly Savings. Example: $250 fee ÷ $277/month savings = 0.9 months break-even. Most recasts break even within 1-2 months, making them very cost-effective. The calculator helps you understand when recasting becomes profitable.

Question 17

When should you recast your mortgage?

Accepted Answer

Recast your mortgage when: 1) You have extra cash (windfall, bonus, inheritance), 2) You want lower monthly payments, 3) You have a good interest rate you want to keep, 4) You don't want refinancing hassle/costs, 5) You want to improve cash flow, 6) Your loan is eligible (conventional/conforming, not FHA/VA/USDA). Don't recast if: You need liquidity, You can invest for higher returns, You want to pay off loan faster, Your loan type doesn't allow it.

Question 18

How much does it cost to recast a mortgage?

Accepted Answer

Mortgage recast costs typically range from $150 to $500, with most lenders charging $250-$350. Some lenders charge a percentage of the lump sum (0.25-0.5%), while others charge a flat fee. Compare this to refinancing costs of $2,000-$5,000. The recast fee is usually much lower than refinancing costs, making recasting an affordable way to reduce payments. Always ask your lender about their specific recast fee before proceeding.

How to Calculate Mortgage Recast Savings - Mortgage Recast Calculator & Formula

How to Calculate Mortgage Recast Savings - Step by Step Guide & Formula

Mortgage Recast Formula

Main Formula:

Step-by-Step: How to Calculate Mortgage Recast Savings

Step 1: Calculate Original Monthly Payment

Step 2: Calculate New Principal Balance

Step 3: Calculate New Monthly Payment

Step 4: Calculate Monthly Savings

Step 5: Calculate Total Interest Savings

Step 6: Calculate Net Savings

Mortgage Recast Calculation Example

Example: $300K Balance, $50K Lump Sum, 4.5% Rate, 25 Years Remaining

Quick Example Result

How This Calculator Works

Mortgage Recast Formula - Complete Guide

Main Formula:

Quick Calculation Example:

Financial Analysis Components

Industry Standards & References

Example Calculation

Loan Details:

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