DEFINITION of 'Scheduled Recast'

A recalculation of the remaining amortization schedule of a mortgage at a certain date set and known in advance. A scheduled recast is part of some mortgage programs because those mortgages have features which allow for payments to be made early for mortgages which are not fully amortizing. Therefore, at the scheduled recast date, a new amortization schedule is calculated based on the remaining term and principal balance at the time which ensures that the mortgage will be paid off by the end of its original term. This usually means that the remaining scheduled payments will increase.

BREAKING DOWN 'Scheduled Recast'

Scheduled recast is a term most often associated payment option ARMs. Payment option ARMs have a feature which allows for the accrual of deferred interest. The deferred interest created at each payment date is added to the principal balance of the mortgage. This is known as negative amortization. Often, at the end of the fifth year there is a scheduled recast date. On this recast date, the amortization schedule is recalculated so that, based on the remaining principal balance and the fully indexed interest rate at the time, the future payments will amortize the mortgage over its remaining term.

RELATED TERMS
  1. Mortgage Recast

    A feature in some types of mortgages where the remaining scheduled ...
  2. Recast Trigger

    A clause in a loan contract that causes an unscheduled recasting ...
  3. Unscheduled Recast

    The unscheduled recalculation of the remaining amortization schedule ...
  4. Negative Amortization

    An increase in the principal balance of a loan caused by making ...
  5. Payment Option ARM

    A monthly adjusting adjustable-rate mortgage (ARM) which allows ...
  6. Growing-Equity Mortgage

    A fixed rate mortgage on which the monthly payments increase ...
Related Articles
  1. Personal Finance

    Choose Your Monthly Mortgage Payments

    Exotic mortgages allow you to decide how much to pay. Find out how much they really cost.
  2. Personal Finance

    Mortgage Amortization Strategies

    Should you get a 30-year mortgage? A 15-year one? Ways to decide which mortgage is the best fit.
  3. Personal Finance

    Ways to Be Mortgage-Free Faster

    Getting rid of this debt faster has bigger benefits than you might think.
  4. Investing

    Payment Option ARMs: A Ticking Time Bomb?

    With these mortgages the loan's principal can continue to increase - even as payments are made.
  5. Personal Finance

    Understanding the Mortgage Payment Structure

    We explain the calculation and payment process as well as the amortization schedule of home loans.
  6. Personal Finance

    Make A Risk-Based Mortgage Decision

    Find out how to choose which mortgage style is right for you.
  7. Personal Finance

    7 Steps to Help Pay off Your Mortgage in Retirement

    A monthly mortgage payment can be hard to handle in retirement if you're not ready.
  8. Personal Finance

    Option ARMs: American Dream Or Mortgage Nightmare?

    Option adjustable rate mortgages could make or break your home-buying experience.
  9. Personal Finance

    Shopping for a Mortgage in 2017? Use This Tool First

    As home-buying technology has progressed, the process of finding the best mortgages rates for 2017 can all be done online.
RELATED FAQS
  1. How should you choose the amortization period for your mortgage?

    Read about key considerations that homeowners should take into account before choosing the amortization period for their ... Read Answer >>
Trading Center