Definition: The Mortgage Recast Calculator is a tool that allows borrowers to estimate how much their mortgage payment would be if they were refinancing or repaying the remaining balance on a loan. It uses the borrower's current debt-to-income ratio (DTI) as input and provides an estimated amount of monthly payments necessary to meet all principal and interest payments. The DTI is a measure of debt-to-income ratio, which calculates how much of your income you can pay towards your mortgage. The higher your DTI, the greater the likelihood that you will have trouble repaying your mortgage in full. To use the Mortgage Recast Calculator, the borrower enters their current monthly income, total mortgage balance (including any other debts), and other relevant information about their loan. This data is then used to calculate how much of each month's payment the borrower would need to make to meet all outstanding debt payments. The calculator provides a range of estimates for what it considers to be "normal" monthly debt repayment amounts, based on typical income levels and mortgage interest rates. It suggests that if your DTI is 30% or higher, you may need to consider refinancing your loan to reduce the balance on your mortgage. It's important to note that the Mortgage Recast Calculator is not a recommendation for refinancing, but rather an estimate of what monthly payments would be necessary to meet all outstanding debt payments.
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