For example, conventional mortgages and jumbo mortgages can be recast, but FHA loans and VA loans cannot. That said, not all lenders offer the service and not all loans are eligible for recast. If you want to save on your monthly payments-while keeping your current interest rate-mortgage recasting can be an excellent alternative to refinancing. Once you receive notification that your mortgage was recast, start making your newly calculated payments. However, the recasting process can take weeks to complete once you’ve made your payment, and it’s important to continue regular payments in the meantime. After recasting your mortgage, your monthly loan payment will be lower based on the remaining balance. Once approved, make your lump-sum payment against your outstanding mortgage balance. That fee is significantly lower than you’d pay to refinance your home loan. Note that many lenders charge a fee of up to $500 for recasting, but this fee varies. When you’re ready to proceed with the recasting process, submit a formal request to your lender. Based on your lender’s mortgage recast requirements, save money for your lump-sum payment before continuing with the process. This amount is typically between $5,000 and $10,000, but may be a percentage of your outstanding mortgage balance-usually up to 10%. In addition to confirming that your mortgage can be recast, find out if your lender has a minimum lump-sum payment. Your lender also will be able to tell you if your mortgage is eligible. What’s more, some types of mortgages (like those backed by the Federal Housing Administration and Department of Veterans Affairs) are not eligible for recasting. Not all lenders offer mortgage recasting, so it’s important to confirm availability with your lender before setting aside funds. Contact your lender to determine your eligibility.How Does Mortgage Recasting Work?įollow these steps to recast your mortgage: Still, you’ll be able to pay off your loan early if you go this route. Doing so will decrease your loan balance, but your monthly payments will stay the same. If your lender doesn’t offer recasting, you can make a lump-sum payment on your mortgage on your own. Under these circumstances, the monthly payment-assuming a 3.5% interest rate-would decrease from $1,796 to $1,252 following the recast. Recasting the loan would involve amortizing the remaining $250,000 balance over the remaining 25-year term. Say, for example, you recast a 30-year, $400,000 mortgage with $350,000 remaining by paying a lump sum of $100,000 five years after the loan was originated. Unlike mortgage refinancing, mortgage recasting does not change your loan term or your interest rate-you’ll simply have a lower monthly payment, but you’ll also save on interest payments over the life of the loan. If your loan requires other types of insurance like private mortgage insurance (PMI) or homeowner's association dues (HOA), these premiums may also be included in your total mortgage payment.Mortgage recasting is the process of reducing your mortgage balance through a lump-sum payment, and then making smaller monthly payments until you pay off your loan. Your mortgage lender typically holds the money in the escrow account until those insurance and tax bills are due, and then pays them on your behalf. If you have an escrow account, you pay a set amount toward these additional expenses as part of your monthly mortgage payment, which also includes your principal and interest. The 'principal' is the amount you borrowed and have to pay back (the loan itself), and the interest is the amount the lender charges for lending you the money.įor most borrowers, the total monthly payment sent to your mortgage lender includes other costs, such as homeowner's insurance and taxes. Remember, your monthly house payment includes more than just repaying the amount you borrowed to purchase the home.

These autofill elements make the home loan calculator easy to use and can be updated at any point. Zillow's mortgage calculator gives you the opportunity to customize your mortgage details while making assumptions for fields you may not know quite yet.

Mortgage early payment calculator