Recasting lowers your payment by re-amortizing a reduced balance over the same term at the same rate — the right tool when you have cash and a below-market rate worth keeping. This calculator also shows what the identical lump sum would do if you simply prepaid instead, because that path saves more.
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You apply a lump sum to principal and the lender recalculates your payment over the remaining term at the same interest rate. There is no new loan, no credit check, and no appraisal — just a small fee, usually $150 to $500.
Recasting wins when your current rate is below market, because refinancing would surrender it. Refinancing wins when rates have fallen, since it lowers both the payment and the rate. Recasting is also far cheaper and faster to execute.
Prepaying saves more money; recasting frees up more cash flow. The same lump sum applied without a recast keeps your higher payment, ends the loan years earlier, and saves more total interest. Choose based on which you need — flexibility or savings.
No. Conventional loans usually permit it, but FHA, VA, and USDA loans generally do not. Most servicers require a minimum lump sum, commonly $5,000 to $10,000, and a minimum resulting reduction in principal.
No. That is the defining feature — the term stays exactly as it was, only the payment drops. If you want an earlier payoff instead of a lower payment, prepay without recasting.
Sources: CFPB — paying extra on your mortgage; Fannie Mae Servicing Guide — loan modification and recast; Standard amortization (annuity) formula.
Estimates for educational purposes only — not a loan offer, financial advice, or a commitment to lend. Actual rates, payments, and terms vary by lender and creditworthiness.