Mortgage Recast Calculator

A mortgage recast (also called re-amortization) is the least-known lever in home finance: you make a lump-sum principal payment — typically $5,000 to $50,000 — and the servicer recalculates your monthly payment against the smaller balance over the remaining term. No credit check, no closing costs beyond a modest fee, no rate change. The catch, and it is a big one, is confusion about what happens to your term.

The most common misconception, repeated constantly on borrower forums, is that a recast "resets the clock" back to 30 years. A standard recast does not: your remaining term is preserved and only the payment is recalculated. (If a servicer extends the term, that is a modification, not a recast — read the paperwork.) This calculator implements the standard semantics: term unchanged.

The second misconception is that a recast saves interest. By itself, it does the opposite of the aggressive option: it lowers your payment and keeps the same end date, which means slightly more interest than simply making the lump sum and continuing to pay the old amount. Where a recast shines is cash-flow relief — a lower mandatory payment is a safety buffer if income drops. This tool puts the three honest scenarios next to each other so the tradeoff is visible.

How the recast calculation works

Scenario A — no recast: your lump sum goes straight to principal, your payment stays exactly as it is, and the loan ends early. This is the highest-savings path.

Scenario B — recast, pay the new lower payment: the servicer recalculates your payment as PMT over the remaining term at your current rate, using the post-lump balance. Term unchanged; payment down; end date unchanged.

Scenario C — recast, keep paying the old amount: same recalculated schedule, but you keep sending the old payment. The gap between old and new payment is extra principal every month, and the loan ends years early. This is where the recast quietly becomes the best of both worlds: lower mandatory payment (safety) plus accelerated payoff (savings).

The fee matters more than people expect: a $300 fee on a $10,000 recast is a 3% immediate cost, which is why most servicers' $0–$250 fees are fine and larger ones deserve scrutiny. All three scenarios include it.

Worked example. Balance $403,985.49 at 6.25%, 28 years remaining, recast with $45,000 lump + $300 fee (baseline total interest: $452,501.76). Scenario A: keep paying $2,549.07, payoff Jan 2048 — 81 months early. Scenario B: new payment $2,263.24 (−$285.83/mo), same end date. Scenario C: recast but keep paying $2,549.07 — payoff Feb 2044, total interest $228,411.02. The recast's real gift is the option value of a $285.83 lower mandatory payment.

Terms & definitions

Frequently asked questions

References

1. CFPB — What is a mortgage recast?
2. CFPB — What is an amortization schedule?
3. Federal Reserve — Mortgage origination resources (APR vs note rate)