1. What is a Recast Payment?

A recast payment is a recalculated monthly payment amount after making a large principal payment on a loan. It spreads the remaining balance over the original loan term, resulting in lower monthly payments.

2. How Does the Calculator Work?

The calculator uses the recast payment formula:

Where:

• New Balance — The remaining loan balance after a large payment ($)
• Remaining Term — Number of months left in the original loan term

Explanation: This simple division calculates the new monthly payment amount by distributing the remaining balance evenly over the remaining loan term.

3. Importance of Recast Calculation

Details: Recast calculations help borrowers understand how large principal payments can reduce their monthly financial burden while maintaining the original loan payoff schedule.

4. Using the Calculator

Tips: Enter the new loan balance in dollars and the remaining term in months. Both values must be positive numbers with the remaining term at least 1 month.

5. Frequently Asked Questions (FAQ)

Q1: What is loan recasting?
A: Loan recasting is recalculating the monthly payment after a large principal payment, resulting in lower monthly payments while keeping the original loan term.

Q2: Are there fees for loan recasting?
A: Many lenders charge a recasting fee, typically ranging from $150-$500, though policies vary by lender.

Q3: How often can I recast my loan?
A: This depends on your lender's policy. Some allow multiple recasts, while others limit it to once during the loan term.

Q4: Does recasting affect my interest rate?
A: No, recasting only affects the monthly payment amount. The interest rate and original loan term remain unchanged.

Q5: What types of loans can be recast?
A: Typically, mortgage loans can be recast. Other loan types may have different recasting policies or may not offer this option.