Investopedia explains Mortgage Recast
Payment option ARMs are popular negative amortization mortgages with recast features. Most payment option ARM’s have a scheduled recast in month 61. Additionally, they have triggers that might cause an unscheduled recast to occur if a negative amortization limit is reached. For example, if the principal balance of the loan reaches a set limit through negative amortization, a recasting of the mortgage is triggered.s.
Responsibilities that come with a mortgage
Before taking on the responsibility of a mortgage, which is a legally-binding financial commitment that could last several decades, make sure you are ready.
Ask yourself:
Are you currently in a financial position to comfortably make the monthly mortgage payment? Use our mortgage calculator to see what your payment might be.
Do you have a financial cushion for sudden financial difficulties (for example losing your job)? This cushion should cover six months of your expenses.
Do you know the risks if you cannot pay your mortgage in the future?
If you’ve answered these questions and think you may not be ready, then you should probably focus on building your credit reputation by paying your bills and arming yourself with knowledge as well as saving up the financial cushion most savvy homeowners have. By waiting until you are financially ready, you will help ensure your success as a long-term homeowner.