How a mortgage recast works
When you recast a mortgage, you make a large one-time payment toward the principal, and your lender re-amortizes the loan: the new, smaller balance is spread over the months you already had left, at the same interest rate. In the modeled scenario, the contractual principal-and-interest payment falls while the entered rate and inferred remaining term stay unchanged. Eligibility, documentation, timing, and fees remain account-specific.
This calculator works out your remaining term from the balance, rate, and current principal-and-interest payment, then recomputes the payment on the reduced balance over that same term. The displayed net interest saving is the difference between total remaining interest before and after the recast, minus the entered recast fee. The fee-payback note separately estimates how many months of modeled payment savings recover that fee.
Recast vs. refinance vs. extra payments
| Feature | Recast | Refinance | Extra payments |
|---|---|---|---|
| Monthly payment | Recalculated lower in this model | Set by the new loan | Contractual payment generally stays the same |
| Interest rate | Unchanged | New market rate | Unchanged |
| Payoff date | Same remaining schedule in this model | Set by the new term | Can move earlier |
| Cost input | Servicer quote | Closing Disclosure | Check loan terms |
| Account review | Ask the servicer | New-loan underwriting | Check payment instructions |
| Use this comparison for | Lower-payment scenario | Replacement-loan scenario | Earlier-payoff scenario |
If the same lump sum is applied and the borrower then keeps paying the original amount, that extra-payment path reduces principal faster than the lower scheduled payment modeled after a recast. A recast instead converts the lump sum into monthly cash-flow relief. Which is better depends on whether you value a lower payment today or a faster payoff overall.
Who can recast, and what it costs
Fannie Mae’s servicing guide describes re-amortization after a substantial principal curtailment for eligible loans, but requirements are not universal. Before sending a lump sum, ask the servicer whether the account qualifies, how principal will be applied, what documents and fee are required, and when a new payment would take effect.
Method, example, and sources
How this calculator works
The model infers the remaining number of payments from the current principal, annual rate, and principal-and-interest payment. It subtracts the lump sum, re-amortizes the smaller balance at the same rate over that same remaining period, and compares payments and scheduled interest. It separately subtracts the entered fee for an after-fee figure and divides that fee by monthly savings for break-even.
Worked example
For a $300,000 balance at 6.5%, a $2,100 payment, a $50,000 principal curtailment, and a $250 fee, about 275 payments remain. Re-amortization lowers the payment to $1,750 and displays about $46,053 of net interest saved after subtracting the fee.
What the estimate leaves out
- The inferred term is only valid for a fully amortizing fixed-rate principal-and-interest payment; escrow and account-specific adjustments are excluded.
- Eligibility, minimum principal curtailment, documentation, timing, and fees depend on the loan owner and servicer and are not determined here.
- The comparison assumes the reduced payment is made for the remaining term; it does not model keeping the old payment, refinancing, taxes, or an alternative use of the lump sum.
Primary sources
Frequently asked questions
What is a mortgage recast?
A mortgage recast (or re-amortization) is when your lender recalculates your monthly payment after you make a large lump-sum payment toward principal. Your interest rate and payoff date stay the same — only the monthly payment drops, because the smaller balance is spread over the remaining term.
How much does a mortgage recast cost?
Fees are set by the loan owner and servicer. Enter the written fee quoted for your account; do not infer it from a market range. A refinance is a new loan with a separate Closing Disclosure, so compare the actual costs rather than assuming either option is cheaper.
What is the minimum lump sum required to recast?
There is no universal minimum. The servicer decides whether the loan is eligible and what counts as the required substantial principal curtailment. Ask for the account-specific re-amortization requirements before sending money.
Can all mortgages be recast?
No. Availability depends on the loan owner, program, contract, account status, and servicer. Fannie Mae publishes a process for eligible loans after a substantial principal curtailment, but that does not establish eligibility for every conventional or government-backed loan.
Is it better to recast or refinance?
They are different transactions. This recast scenario keeps the entered rate and remaining term while lowering the scheduled payment. A refinance replaces the loan and can change its rate, term, and costs. Compare written account terms and the full cost of both paths.
Does recasting hurt your credit score?
A re-amortization is not modeled as a new loan here, but credit reporting and any eligibility review are outside the calculator. Ask the servicer what review it performs and how the transaction will appear on account records.