Articles & Resources on Mortgage Basics

Sam · Last edited by Sam on Sun Nov 06, 2005 10:37 pm

Getting a mortgage loan becomes easier when you have a clear understanding of mortgage basics and popular loan programs. You can then proceed towards applying for a loan based on your planned budget towards mortgage payments. Here is a group of articles to provide you with information on various loan programs and help you with efficient planning towards getting a mortgage.

An understanding about the best mortgage type
There is no single, simple formula to determine the type of mortgage that is best for you.The type of...
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Certificate of Veteran Status is a certificate given to veterans who have served 90 days of...
Budget for a home purchase
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Difference between ''variable and constant'' method
The Constant method of calculating interest assumes that the interest factor does not change...
An understanding about Mortgage
A mortgage is a secured loan instrument .The funds from a mortgage are used to finance the...
Blanket Mortgage
Blanket Mortgage is a type of mortgage which facilitates the borrowing of money against more...
Difference between conforming and non-conforming loans
A conforming loan works in accordance with the guidelines set by the two primary GSEs...
Difference between Fixed Rate Mortgage and Adjustable Rate Mortgage
Choosing the right kind of mortgage is indeed a tedious job. With lenders and financial institutions...
Difference between locking in an interest rate and floating
Mortgage rates can change from day to day or even more often. If you are concerned that the...
Equity, popularity causes of Home Equity Loans, Lines of Credit
Equity is an owner's financial position in a property. Equity is the difference between the fair market...
Home Mortgage
Getting a desirable mortgage for buying a dream home is what everyone wishes for. Borrowing a...
Interest only Mortgage: A Misnomer
If you thought that this mortgage could help you do away with the principal, You are totally mistaken....
Loan To Value Ratio
The loan to value ratio is one ratio important to both the lender and the borrower. The lender uses...
Mobile Home Loan
A home is an important asset of your life. It is probably one of the most important purchases you...
Mortgage Life Insurance
Mortgage Life Insurance is a type of term life insurance often bought by mortgagors. It is a policy...
Primary Mortgage Market
Primary mortgage market includes a market where loans are initiated by lenders like commercial...
Secondary Mortgage Market
When you apply for a mortgage, you may have the impression that your lender will service the loan...
What is a Mortgage Rate?
Mortgage rates are interest rates for a mortgage expressed as a percentage.When you take a...
What is Reverse Mortgage?
A reverse mortgage or reverse equity mortgage is a home loan that does not require to be paid...
What is Tenancy by the Entirety?
Tenancy -by-the-entirety is a legal term for the joint ownership of a property between a husband...
Components of mortgage payment
Mortgage payment consists of four parts: principal, interest, taxes and insurance (PITI)...
Budget A Know-How
Budget is a detailed plan of actual or anticipated income and expenses estimated over a period of...
Commercial Mortgage, Features and Suitability
Loan taken against some collateral apart from a residential property is called commercial...
Mortgage Credit Certificate
A Mortgage credit certificate (MCC) provides eligible first-time homebuyers the advantage of a...
Shared Equity Transaction A Know-How
Shared Equity Transaction is a transaction which involves a written agreement between a buyer...

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do you have more info on neg am loans in depth on how they work and why

Caron · Posted: Mon Oct 17, 2005 1:08 pm Post subject:

Hi,

Welcome to MortgageFit Forums.

The process by which a loan is paid off periodically by specifically structured payments is known as amortization, whereas when the monthly payments fail to cover the interest due owing to which there is a gradual increase in the mortgage debt is termed as negative amortization.

Negative amortization loan is an adjustable rate loan which increases its balance instead of decreasing it as you repay your dues. These loans often have a very low rate at the beginning which enables the borrower to make low initial payments.

This loan often has the option of paying more each month on your payment to catch up with the difference, rather than having that amount added to the balance which is due.

One of the advantages of negative amortization is that it helps in reducing the monthly mortgage payment at the initial stage of the loan period.

Lenders do have limits on how much negative amortization they are going to allow before they require the borrower to start paying back the loan. Generally, when the deferred interest reaches 110 percent or 115 percent of the original amount which was borrowed, the lender will recast the loan.

Before you go for a negative amortization, you should analyze the negative aspect also as it is very easy for a borrower to get into serious financial problems with this type of loan. If the loan continues, the remaining balance may be higher than the value of the home!

Hope this information will help your queries.

For further details kindly refer Features of Negative Amortization.

Regards,
Caron

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