Introduction: The Recast A Mortgage Calculator is a tool designed to help you estimate the new monthly payment on your mortgage after making additional payments. By entering details such as the current loan amount, interest rate, years remaining on the loan, and an additional monthly payment, you can assess the impact of recasting your mortgage.
Formula: The calculator uses a formula that considers the current loan amount, interest rate, remaining loan term, and any additional monthly payment to calculate the new monthly payment after recasting.
How to Use:
- Enter the current loan amount.
- Input the current interest rate.
- Specify the remaining years on the loan.
- Enter any additional monthly payment you plan to make.
- Click the “Calculate” button.
Example: For example, if your current loan amount is $200,000, the interest rate is 4%, there are 10 years remaining on the loan, and you plan to make an additional monthly payment of $100, the calculator will estimate your new monthly payment after recasting.
FAQs:
- Q: What is mortgage recasting? A: Mortgage recasting involves making a large lump-sum payment towards the principal, resulting in a lower monthly payment without changing the loan’s terms.
- Q: How does recasting differ from refinancing? A: Recasting keeps the existing loan but adjusts the monthly payment, while refinancing involves getting a new loan with different terms.
- Q: Is there a limit to the additional payment I can make for recasting? A: The additional payment depends on your lender’s policies. Some lenders may have restrictions, so it’s advisable to check with them.
- Q: Will recasting reduce the overall interest paid on the loan? A: Yes, by reducing the principal amount, recasting can lead to lower overall interest payments over the life of the loan.
- Q: Can I recast any type of mortgage? A: Recasting is typically applicable to conventional mortgages, and not all lenders offer recasting options.
- Q: How often can I recast my mortgage? A: The frequency of recasting depends on your lender’s policies. Some lenders may have specific time intervals or restrictions.
- Q: Will recasting affect my credit score? A: No, recasting does not impact your credit score as you are not obtaining a new loan.
- Q: Are there fees associated with mortgage recasting? A: Some lenders may charge a fee for recasting. Check with your lender to understand any associated costs.
- Q: Can I still recast if I have an adjustable-rate mortgage (ARM)? A: Recasting is more common with fixed-rate mortgages, but it’s best to check with your lender regarding ARMs.
- Q: Can I undo a recast if I change my mind? A: Once a mortgage is recasted, it’s generally irreversible. Ensure you are certain about your decision before proceeding.
Conclusion: The Recast A Mortgage Calculator provides valuable insights for homeowners considering making additional payments to recast their mortgage. It’s a useful tool to estimate the impact on your monthly payment and overall interest paid, allowing you to make informed decisions about your mortgage strategy.