Mortgage Recast Calculator is used to calculate how much you can save each month by recasting your existing mortgage. Recasting calculator will show you whether recasting is a good option and how much interest payment you save by recasting your existing mortgage.
| Recast Mortgage Balance | $1,193.54 |
|---|---|
| Monthly Payment | $179,673.18 |
| Remaining Terms | $0 |
| Start Date | $0 |
| Payoff Date | $0 |
| Total Interest Paid | $0 |
| Total Payment | $0 |
| Comparison | Original | Recast |
|---|---|---|
| Monthly Payment | $1,193.54 | $954.83 |
| Total Interest | $179,673.18 | $143,739.01 |
| Fees | $0 | $250 |
| Savings | $0 | $35,684.16 |
| Payment Date | Payment # | Interest Paid | Principal Paid | Total Payment | Remaining Balance |
|---|
Mortgage recasting, also known as mortgage reamortization, is a process that allows borrower to reduce their monthly mortgage payments by making a large, lump-sum payment towards the principal balance of their loan. This process does not change the interest rate or the term of the loan. Instead, it recalculates the monthly payments based on the new, lower principal balance while keeping the same interest rate and remaining term.
Mortgage recasting involves making a large lump-sum payment towards your mortgage principal, after which the lender recalculates your monthly payments based on the reduced balance, while keeping the same interest rate and loan term.
Lenders usually have a minimum requirement for this payment, it can be anywhere from $5,000 to $10,000. There are also processing fees to recast a mortgage which could cost a few hundred dollars. Borrowers should talk to their lender and ask for the exact amount they have to pay for recasting.
While there are many good reasons for recasting, there are also downsides.
Recasting reduces your monthly payments by applying a large principal payment to your existing loan without changing the interest rate or term, while refinancing replaces your current mortgage with a new loan that may have a different interest rate and term.
Recast and refinance can both save you money on interest payments, and may reduce your monthly payments, but they work differently. Following is a table that shows the differences between recast and refinances.
| Recasting | Refinancing | |
|---|---|---|
| Fees | A few hundred processing fees | Closing costs up to 2% - 6% of the loan amount |
| Initiating a new loan? | No | Yes |
| Are proof of income, credit score, employment history, pay stubs, debt & assets, and tax documents needed? | No | Yes |
| Is a home appraisal needed? | No | Yes |
| Will your interest rate change? | No | Yes |
| Will your mortgage terms change? | No | Optional - you can choose a shorter or longer term. |
| Will your monthly payment change? | Yes, your monthly payments will be reduced as your mortgage balance is lower. | Yes, your monthly payments could go up or down depending on the new interest rate and the chosen term. If you are refinancing your mortgage from a 30-year term to a 15-year term, your monthly payment may go way up, but you will save in overall payments. |
If the interest rate goes down sharply or is much lower than the interest rate on the borrower's mortgage, and the borrower has a strong credit score and good income with low debt, then refinancing is the better approach.
By refinancing, the borrower will lower the interest rate on his new mortgage, which will save him more money than a recast. If he still wants to pay a lump sum, he can make a one-time extra payment to reduce his mortgage balance before or after refinancing.
Another situation where refinance is a better choice than recasting is when a borrower wants to shorten the mortgage term. He can choose to refinance his 30-year term into a 15-year term because a 15-year term has a lower interest rate and the borrower will pay much less in interest.
If the interest rate goes up or unchanged, then recasting is more promising because the interest rate doesn't change on recast, and the fees are much lower for recasting than for refinancing.
If a borrower has a low credit score or is self-employed and cannot provide consistent employment history, recasting might be better since there is no approval process.
With a refinancing, the lender would check the borrower's credit score to determine the interest rate. Borrowers with low credit scores will end up with higher interest rates with refinancing.
The calculation for mortgage recast is similar to calculating loan payments which can be found on the main page of our mortgage recast calculator.
We've developed this mortgage recasting calculator to save the borrower all the trouble of calculating manually. Here is the meaning of each field of our recast calculator.
Remaining Balance - the remaining balance of the existing mortgage.
Interest Rate - the interest rate of the mortgage.
Current Monthly Payments - the monthly payments the borrower is paying right now.
Recasting Payment - the one-time lump sum payment the borrower is planning to make.
Recasting Cost - the costs of recasting the mortgage.