Mortgage Recast Calculator
a month, down $316.03
After putting $50,000 against a $400,000 balance at 6.5% with 30 years left. The term does not change, so the payment falls instead. Over the rest of the loan that saves $63,772 of interest.
- Payment now
- $2,528.27
- Term left
- 30 years
- Servicer fee
- $350
The lump sum is larger than the balance. There is nothing left to recast: that money pays the mortgage off outright. The figures below are capped at the balance.
How the new payment is worked out
- Balance now$400,000
- Lump sum−$50,000
- Balance it is recalculated on$350,000
- Spread over the term still left 30 years, unchanged30 years
- New payment At the same 6.5% rate$2,212.24
A recast does not touch the rate or the term. That is what separates it from refinancing, and it is why it cannot go wrong the way a refinance can: there is no new loan, no new rate, and no closing costs beyond the servicer's fee.
What else that money could do
A recast is one of three things you can do with a lump sum, and on these figures it is not the one that saves the most. It is the one that lowers the bill you are obliged to pay each month. Those are different goals and the right answer depends on which you need.
The comparison underneath assumes the same $50,000 in every case. The refinance figure uses a rate of 5.75% and $6,000 of closing costs rolled into the balance, which is what tends to be offered; change those and it moves.
The one thing worth knowing
Recasting and then carrying on paying what you paid before is arithmetically the same thing as never recasting and putting the lump against the principal. Identical months, identical interest. The recast only lowers what you are required to pay. If you can afford the old payment, a recast costs you a fee to be allowed to pay less.
What this does not include
- Property tax and insurance held in escrow, which are paid alongside this and are not part of it
- Private mortgage insurance, which a large lump sum may let you drop, separately
- Whether your loan can be recast at all. Government backed loans usually cannot and lenders set their own rules
- What you would earn investing the lump sum instead, which is the real alternative to all three
Three things to do with $50,000
| What you do | Monthly payment | Loan cleared in | Interest from here |
|---|---|---|---|
| Nothing | $2,528.27 | 30 years | $510,178 |
| Recast | $2,212.24 | 30 years | $446,406 |
| Pay it down, keep the payment | $2,528.27 | 21 years 5 months | $298,542 |
| Refinance at 5.75% | $2,077.52 | 30 years | $391,907 |
Recasting saves $63,772 and drops the payment by $316.03. Paying the same money down saves $211,636 and clears the loan 8 years 7 months early, while the payment stays where it is.