When we first bought our love potion starter collection from Madame Destinia, she warned us that we’d have to repeat the love spell we’re casting once a month for six months for it to really take. We definitely want it to take, so we set ourselves a little reminder on our phone: on the first of every month, we’ve got a scheduled recast of our love spell. That girl from the bus stop will never know what hit her.
Of course, in the mortgage world, the term “scheduled recast” means something totally different. And, surprise, it has nothing to do with spells and love potions.
In the mortgage world, a “scheduled recast” is when our mortgage payments automatically adjust according to a predetermined adjustment schedule. We’ll see this most often in the option ARM world, where we can pay different amounts toward the mortgage loan every month.
Like...let’s say we just secured a 30-year option ARM mortgage with an introductory interest rate of 2.79%. Every month, we can make the full principal-plus-interest payment of $1,000, we can make an interest-only payment, or we can make an even smaller minimum payment. After 24 months, as per our loan agreement, we’ll hit our first scheduled recast date. This means our lender is going to look at how much we owe, how much we’ve paid off, and our payment history, and they’re going to redo our payment schedule and amount based on those numbers. If we haven’t been making the full payment every month, there’s a good chance our payment amount could go up, in addition to our interest rate increasing.
Scheduled recasts are outlined in our mortgage docs, so if we are thinking of going the option ARM route, we should pay close attention to when they are, and what the recast will mean for us.
Related or Semi-related Video
Finance: What is a Reverse Mortgage?6 Views
Finance allah shmoop What is a reverse mortgage All right
people let's start with a normal mortgage You put one
hundred grand down borrow three hundred grand and are the
proud new owner of this baby in palo alto california
You make payments for thirty years at five percent interest
and then you retire their debt free So that's a
mortgage but what's a reverse mortgage Like one of these
egg trump Well kind of at least financially the payments
go in the opposite direction of a normal mortgage Like
you're old you just want to live out your remaining
years with the basic comforts Shower seats stair lift high
absorption adult diapers You own all of your home No
mortgage on it You paid it all off The home
is now worth a million box Nice shoebox There you
can do a reverse mortgage pledging your home is an
asset and basically just receiving a payment of l say
five grand a month from that reverse mortgage and you'll
get to deduct interest costs as you go Justus if
it were a normal mortgage well after forty months you
you know croak in that time period you've taken out
Forty times five grand or two hundred grand in loans
plus some interest and you sell your home for a
cool million Rather your heirs dio So what happens now
Well they just take the million bucks from the sale
write a check for two hundred grand and change to
the bank to pay off the reverse mortgage that you
had accrued while you were you know wasting away to
nothing and your heirs end up happy like they miss
you But you know a free stair lift Who are 00:01:37.997 --> [endTime] you
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