Enter each of the following values into the fields on the first page: The first step to calculate the recasting of your mortgage is to enter the basic calculation parameters. This recast mortgage calculator is pretty easy to use, but we’ve included some instructions if you need help. How To Use Our Recasting Mortgage Calculator A HELOC enables you to borrow against your home equity on a revolving basis if you need to. If you’re concerned about that, you may want to look into a home equity line of credit (HELOC).

Yes, the lower payment is nice, but once you pay that lump sum, that cash is no longer usable for something else. The one potential downside of a recast is that you lock up a lot of cash in your home. You don’t need to refinance at a potentially higher rate to reduce your payments. This can be especially advantageous if your interest rate is lower than prevailing interest rates.

That’s certainly not a bad thing because you’re paying off the mortgage faster and saving yourself a lot of interest.īut what if you really need a lower mortgage payment? A recast reduces your mortgage payment without the hassle, paperwork, and expenses of a refinance. You’ll still be paying the same amount every month, but the interest part of the payment will be smaller and the principal part of the payment will be larger. Is recasting a mortgage a good idea? Depending on your goals, it can be a great idea! If you have extra cash from a bonus, inheritance, sale of another property, etc., a recast enables you to significantly reduce your monthly mortgage payment without refinancing your mortgage.įor example, if you pay a large lump sum toward your current mortgage balance, your payment won’t change. Even if you make no extra payments, the recast saves around $95,000 in interest over the life of the loan. You can still make extra payments and pay the loan off faster, but you don’t have to. Using our recasting mortgage calculator, we can estimate your new monthly payment and loan balance once the recast is complete: Before Recast After Recast Principal balance: $243,075 $143,325 Years left on mortgage: 28 28 Principal & interest payment: $1,419 $837Īs you can see, the recast mortgage payment is $582 less than the original payment. You talk with your lender and discover that they can do it for a fee of $250. Let’s also assume that you recently received an inheritance of $100,000 and would like to pay down your mortgage and recast the payment. Your principal and interest payment is $1,419/month.Īfter two years of regular monthly mortgage payments, your principal balance is now $243,075. Let’s assume you took out a 5.50% 30-year fixed mortgage for $250,000 two years ago. To see how this works, let’s look at a mortgage recast example. Your lender may have a minimum lump sum requirement and/or may charge a small recasting fee to cover their processing expenses.

Most lenders offer a recast mortgage option, but qualifying requirements may differ from one lender to another. You’ll also pay closing costs and be subject to the usual income and credit requirements and documentation. When you refinance, you replace your existing mortgage with a new mortgage that likely has a different interest rate and loan term. Note that a mortgage recast is not a refinance. Lower payments: You pay the new reduced payment for the remainder of the loan term.Payment recalculation: Your lender recalculates your monthly payment based on the reduced loan balance and remaining loan term.Lump sum payment: You make a large one-time lump sum payment on your mortgage principal balance.This is beneficial for homeowners who have a large lump sum of money available and want to use it to reduce their monthly mortgage payments without going through a refinance. The purpose of a recast is to reduce your loan amount and monthly payment while maintaining your original loan term. A recast is also known as mortgage reamortization. Frequently Asked Questions What is a Mortgage Recast?Ī mortgage recast refers to the process of recalculating the payment and remaining payment schedule of your mortgage without changing the interest rate or loan term.Step 3 – Pay Down Amount and Recast Fee.Step 2 – Mortgage Payment and Years Left.How To Use Our Mortgage Recasting Calculator.

Pennymac recast calculator