Recast Mortgage Calculator With Amortization

Amortization Formula:

\[ Amortization = Balance \times r - Payment \times (1 - (1 + r)^{-n}) \]

Balance ($):

r (%):

n (months):

months

Payment ($):

Amortization:

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1. What is Recast Mortgage With Amortization?

Recast Mortgage With Amortization refers to the process of recalculating the mortgage payment schedule after a lump sum payment, focusing on the amortization component which represents the principal reduction portion of each payment.

2. How Does the Calculator Work?

The calculator uses the Amortization formula:

\[ Amortization = Balance \times r - Payment \times (1 - (1 + r)^{-n}) \]

Where:

$ Balance $ — Current mortgage balance ($)
$ r $ — Monthly interest rate (decimal)
$ n $ — Remaining number of months
$ Payment $ — Monthly payment amount ($)

Explanation: This formula calculates the principal portion of the mortgage payment that goes toward reducing the loan balance.

3. Importance of Amortization Calculation

Details: Understanding amortization helps homeowners see how much of their payment actually reduces the principal, plan for mortgage recasting, and make informed decisions about extra payments.

4. Using the Calculator

Tips: Enter current mortgage balance in dollars, monthly interest rate as a percentage, remaining months, and monthly payment amount. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is mortgage recasting?
A: Mortgage recasting is when a lender recalculates your monthly payment after you make a large lump sum payment, reducing your monthly payments while keeping the same interest rate and term.

Q2: How does amortization affect my mortgage?
A: In the early years of a mortgage, most of your payment goes toward interest. Over time, more of your payment goes toward principal reduction (amortization).

Q3: Can I recast any type of mortgage?
A: Not all mortgages allow recasting. Conventional loans typically allow it, but FHA, VA, and some other loan types may have restrictions.

Q4: What are the benefits of mortgage recasting?
A: Benefits include lower monthly payments without refinancing, no credit check required, and typically lower fees than refinancing.

Q5: How often can I recast my mortgage?
A: Policies vary by lender, but most allow recasting once during the loan term, and typically require a minimum lump sum payment (often $5,000-$10,000).