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Mortgage Recast Calculator (Recast Mortgage Calculator)

Managing your mortgage effectively can lead to significant long-term savings. One strategy that homeowners often overlook is mortgage recasting. Using a mortgage recast calculator helps you determine how much you can save by reducing your monthly payments without the need for refinancing.

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What is Mortgage Recasting?

Mortgage recasting, also known as re-amortization, is a process where a borrower makes a large lump-sum payment towards the principal balance of their loan. The lender then recalculates the remaining loan balance and creates a new payment schedule based on the lower principal amount. Unlike refinancing, recasting doesn’t require a new loan or high closing costs.

This strategy allows homeowners to lower their monthly payments while keeping the same interest rate and loan term.

Find Out Your New Monthly Payment After Mortgage Recasting

When you make a lump-sum payment towards your mortgage, your lender adjusts the balance and recalculates your monthly payment accordingly. A mortgage recast calculator helps estimate the new monthly payment by considering:

  • Current loan balance
  • Interest rate
  • Remaining term
  • Lump-sum payment amount

For example, if you have a remaining balance of $300,000 with a 4% interest rate over 20 years, and you make a $50,000 lump-sum payment, the calculator will show how much your new monthly payment will decrease.

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What You Need to Know About Mortgage Recasting

Before opting for recasting, there are a few essential points to consider:

  1. Lender Requirements: Not all lenders offer mortgage recasting. Check with your bank or credit union.
  2. Fees: Recasting typically involves a fee, which can range from $100 to $500.
  3. Loan Types: Most conventional loans are eligible for recasting, but government-backed loans like FHA and VA loans usually are not.
  4. Savings: Recasting reduces your monthly payment but doesn’t shorten the loan term or lower the interest rate.

Looking to Lower Your Monthly Payments Without Refinancing?

If you’re aiming to reduce your monthly payment without the hassle of refinancing, mortgage recasting might be your best option. Unlike refinancing, recasting:

  • Doesn’t require a new loan
  • Involves minimal fees
  • Retains your current interest rate

This makes it a smart choice for borrowers who have secured a low interest rate and want to avoid the higher costs associated with refinancing.

How to Calculate a Recast Mortgage?

Calculating a recast mortgage involves a few simple steps:

  1. Determine your lump-sum payment: Decide how much extra money you can put toward the principal.
  2. Find your current loan balance: Check with your lender to get the exact amount.
  3. Use a mortgage recast calculator: Input your loan details, including the interest rate and remaining term, to see the new monthly payment.

The calculator provides an easy way to estimate potential savings and compare different lump-sum payment scenarios.

Is Mortgage Recast Worth It?

Whether mortgage recasting is worth it depends on your financial goals. It’s an excellent option if:

  • You want lower monthly payments without changing your interest rate.
  • You have a large sum of money from a bonus, inheritance, or investment.
  • You plan to stay in your home for the remaining loan term.

However, if your goal is to pay off your loan faster, making extra payments toward the principal without recasting may be a better strategy.

Can I Recast My Home Loan?

Yes, you can recast your home loan, provided your lender offers this option. Contact your bank or credit union to learn more about their recasting process and requirements.

How Do I Request a Mortgage Recast?

To request a mortgage recast:

  1. Contact your lender: Ask if they offer recasting and inquire about eligibility.
  2. Submit a lump-sum payment: Once approved, make the required lump-sum payment toward the principal.
  3. Pay the recast fee: Lenders usually charge a fee for processing the recast.
  4. Receive a new payment schedule: Your lender will provide a revised amortization schedule showing the new lower monthly payment.

Credit Union vs Bank Mortgage: Which Should You Choose?

When deciding between a credit union and a bank for your mortgage recast, consider the following:

  • Credit Unions: Often have lower fees and more personalized service.
  • Banks: Typically offer more flexible loan products and faster processing times.

Both options have pros and cons, so choose the one that best fits your needs.

Conclusion

A mortgage recast calculator is a valuable tool for homeowners looking to lower their monthly payments without refinancing. By making a large lump-sum payment towards the principal, you can reduce your financial burden while keeping your existing interest rate. Whether you're a borrower seeking savings or a homeowner planning for the long term, recasting your mortgage could be the smart move you need.

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