Scheduled Mortgage Payment

The amount the borrower is obliged to pay each period, including
interest, principal, and mortgage insurance, under the terms of the mortgage contract. Paying less
than the scheduled amount results in delinquency; paying more results in a partial prepayment.
On FRMs and ARMs that do not allow negative amortization, the scheduled payment is the fully
amortizing payment, unless the loan has an interest-only option for some period at the beginning,
such as five or 10 years. In that case, the scheduled payment is the interest-only payment until the
end of the interest-only period, when it becomes the fully amortizing payment. On ARMs that allow
negative amortization, the scheduled payment may be determined by the lender in a number of ways,
which can change over the life of the instrument. Some of these ARMs also allow the borrower to elect
from alternative payment plans during the early years of the loan. Whatever form the scheduled
payment takes in the early years, however, at some point it becomes the fully amortizing payment.

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