Trust & transparency
How we calculate this
This page documents every formula, source and assumption behind the calculator so you can audit the numbers yourself.
The core idea: run the amortization twice
Most recast calculators do one subtraction and one payment calculation. This tool runs the full amortization math twice, once for your current balance and once for the post-lump-sum balance, then shows you the differences that actually drive the decision: monthly savings, total interest avoided, break-even, and the return your lump sum earns inside the mortgage.
The amortization formula
The standard mortgage payment formula, applied at your monthly rate for the months remaining:
M = P[r(1+r)^n] / [(1+r)^n - 1]
- M is the monthly principal and interest payment.
- P is the principal balance (current, or after the lump sum).
- r is your annual rate divided by 12.
- n is the number of months remaining on the term.
The recast keeps r and n unchanged; only P falls by the lump sum. That is precisely what a real recast does, and it is why the payment drops without touching your rate or payoff date.
What the numbers mean
- Interest savings: total interest remaining before the recast minus total interest remaining after it, assuming no additional principal payments beyond the lump sum.
- Break-even: (lump sum + recast fee) ÷ monthly payment savings. It is the number of months for your cumulative savings to recover the cash you deployed.
- Effective yield: interest saved ÷ lump sum × 100. A simple measure of the guaranteed return your lump sum earns at your mortgage rate.
- Investment comparison: the future value of the lump sum at the return rate you enter, compounded over the remaining term, shown against the interest saved.
Escrow is additive only
A recast does not touch your escrow. Taxes, insurance and PMI are independent of the principal balance, so we show escrow separately and add it to the new payment purely so you see your real total. If your LTV drops below 80% after the lump sum, the insight engine flags that you may separately request PMI cancellation.
Assumptions and honest limits
- Client-side only. Every calculation runs in your browser. Nothing is transmitted, stored or shared. Inputs persist in local storage for convenience only.
- Estimates, not bills. Your servicer's result may differ by a few cents or a few dollars due to rounding, day-count conventions, or internal amortization methods.
- Eligibility varies. Fees, minimum lump sums, seasoning requirements and processing times differ by servicer. Always confirm your servicer's current policy before sending money.
- Sources: Fannie Mae Servicing Guide (including Form 181, reamortization), Freddie Mac Servicing Guide, CFPB mortgage servicing rules, and published servicer recast policies as of August 6, 2026.
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