A · Do nothing
Keep the lump sum. Payment and payoff date unchanged.
Monthly P&I
—
Payoff—
Interest left—
Paid today—
B · Recast
Apply the lump sum, re-amortize over the same term.
Monthly P&I
—
Payoff—
Interest left—
Paid today—
C · Prepay only
Apply the lump sum, keep paying the current amount.
Monthly P&I
—
Payoff—
Interest left—
Paid today—
Where the balances part ways
balance remaining
A · Do nothing
B · Recast
C · Prepay only
Amortization ledger
| Year | Payment | Interest | Principal | Balance |
|---|
What a recast is. The servicer applies your lump sum to principal and re-amortizes the remaining balance over the loan's original maturity date at the same rate. Lower payment, same finish line, no new loan.
Eligibility. Most conventional loans qualify; FHA, VA and USDA loans generally do not. Servicers typically require $5,000–$10,000 in principal and charge $150–$500. Ask before you send the money.
They aren't exclusive. Recast, then keep voluntarily paying the old amount. That's scenario C's math with the option to fall back to B's payment in any month you need the cash.
What's excluded. Principal and interest only. Escrowed taxes and insurance, HOA dues and PMI are not modeled — though a recast that drops you below 80% LTV may end PMI, which is worth asking about.