A mortgage recast calculator shows how much your monthly payment drops if you make a large lump-sum payment toward your principal and ask your lender to recalculate, or “recast,” the loan. Unlike refinancing, a recast keeps your interest rate and remaining term the same while lowering the payment.
Here’s how it works. After the lump-sum payment, the lender reamortizes the remaining balance over the remaining term. The new payment uses the standard formula: M = P Ă— [r(1 + r)^n] Ă· [(1 + r)^n − 1], with the new, lower balance. For example, if you owe $250,000 at 6 percent with 25 years left, your payment is about $1,611. Pay down $50,000 and recast, and the payment on $200,000 drops to about $1,289, saving around $322 a month.
Recast versus refinance: refinancing replaces your loan with a new one, possibly at a different rate, with closing costs. A recast usually has a small fee and no credit check, but not every loan qualifies. Many conventional loans allow recasting, while government-backed loans often don’t, and lenders usually require a minimum lump sum.
Tips: compare a recast with simply making extra principal payments, which also cuts interest but doesn’t lower the required payment. Keep an emergency fund before putting a big lump sum into your house, since home equity isn’t easy to access. This calculator is for education, not financial advice.
Tips for getting accurate results from the Mortgage Recast Calculator: double-check that every input uses the right units, enter numbers without commas or symbols, and run the calculation a second time with a quick estimate in your head to confirm the answer looks reasonable.
How to use the Mortgage Recast Calculator on Minedit: enter your values in the fields, press calculate, and review the step-by-step breakdown under the result. If something looks off, change one input at a time to see how it affects the answer, which is also a great way to learn the math behind it.
Learn more about mortgages on Wikipedia’s mortgage loan article. Find mortgage and debt-to-income calculators on Minedit.