Mortgage Re-Amortization Explained

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Mortgage re-amortization is a process that certain lenders will allow under special circumstances with a borrower. Here are the basics of mortgage re-amortization and how it works.

Mortgage Re-Amortization

Mortgage lenders will sometimes allow mortgage re-amortization to take place if a homeowner makes a large payment on their mortgage. When this happens, the lender is going to re-amortized the loan and recalculate the monthly payment.

How it Works

When you amortized a 30 year fixed-rate loan, they are taking the total amount that is owed and divide it by 360 months. Whenever you make a large payment, one of two things will happen. If re-amortization does not occur, this is simply going to cut down on the amount of time that it takes to pay off your mortgage. If they will re-amortized the loan over the same period of time, this is going to reduce your monthly mortgage payment because you do not have as big of a balance to pay off. It will also reduce the amount of interest that you have to pay over the life of the loan.


In order to be eligible for this type of process, you have to work with a lender that allows it. Typically, you will have to make a certain payment. For example, the lender might require you to pay $10,000 before they will re-amortize the loan.