The tool compares a recast with continuing the current payment and with a separately quoted refinance. Keep the cash you contribute visible in every option; lower debt comes from using your money, not from a fee that the calculator can make disappear.
Get the current loan figures
Enter the unpaid principal balance, annual note rate, remaining payment count and actual contractual principal and interest payment. Use the current statement and servicer information rather than the original balance or an estimated remaining term.
Enter the proposed lump sum, confirmed recast fee and servicer minimum. There is no universal minimum or guaranteed fee to assume. Also record when the payment and revised schedule would take effect.
Keep escrow and mortgage insurance separate. Taxes and insurance can change even when the rate stays the same. Recasting does not automatically cancel PMI or change another program's insurance charges; ask for the actual treatment before entering a reduced amount.
What the calculation does
The calculator subtracts the accepted principal payment from the current balance and spreads the remaining balance over the remaining term at the current fixed rate. That produces the modeled new principal and interest payment.
It separately models keeping the old payment after the principal reduction. Paying more than the new requirement can shorten payoff and reduce interest, assuming the excess is properly applied and there are no contrary contract features.
For refinancing, enter the new rate, term and closing costs from a written scenario. A refinance replaces the mortgage and can change the rate and maturity. Compare matching remaining terms as well as any offered longer term; a smaller payment over more years does not by itself establish lower cost. CFPB recommends comparing the actual Loan Estimates and costs. [2]
A hypothetical post sale recast
Assume a current balance of $380,000, 6.5% fixed annual rate and 300 payments remaining. Assume the contractual payment matches that schedule. A proposed $100,000 principal payment reduces the balance to $280,000.
| Result | ** Before principal payment** | ** Accepted recast example** |
|---|---|---|
| Principal balance | $380,000 | $280,000 |
| Principal and interest | $2,565.79 | $1,890.58 |
| Remaining scheduled payments | 300 | 300 |
The modeled payment reduction is about $675.21 monthly. If the servicer's hypothetical fee is $250, that fee is separate from the $100,000 applied to debt.
Suppose available cash after the old home sale is $160,000. Paying $100,000 principal and the $250 fee leaves $59,750. Against a personal reserve target of $40,000, the remaining margin is $19,750. These are invented figures, not recast terms offered by a particular servicer.
Under the same simplified model, continuing to pay about $2,565.79 against the reduced balance would finish in approximately 166 payments, with the last payment adjusted. That voluntary path has a different cash commitment from making only the lower required payment.
Check the nearest alternative
If a hypothetical refinance offers 6% over the same 300 months on $280,000, principal and interest is about $1,804.04 before any financed costs. If $6,000 of costs are paid in cash, compare those costs and the new loan terms with the recast fee and retained cash. That is not a current rate quote or a recommendation to refinance.
An adjustable rate loan, interest only period, delinquency, modification or unusual amortization can make this fixed rate model inaccurate. A statement payment that does not reconcile with the entered balance and term needs investigation, not a forced answer.
Use the recast versus refinance guide, buy before selling guide and calculator hub for the surrounding decisions.
Send Dane and the servicer the current statement, accepted recast terms and desired cash reserve. Choose a principal allocation after checking the money left for ownership, rather than sending every dollar of sale proceeds before learning whether the payment can change.
This calculator gives an estimate only. It is not a loan offer or approval.