Posted on: 19th Aug, 2009 09:54 am
What is Negative Amortization ?
Archie14p
When there is an increase in mortgage debt when monthly payments on a loan are insufficient to pay off the interest accruing on the principal balance.
The difference is added to the remaining unpaid balance to create negative amortization
Good luck and feel free to ask
When there is an increase in mortgage debt when monthly payments on a loan are insufficient to pay off the interest accruing on the principal balance.
The difference is added to the remaining unpaid balance to create negative amortization
Good luck and feel free to ask
[System detected duplicate content, converted into image. Thanks.]
Negative amortization occurs mostly with an adjustable rate mortgage (ARM). When the monthly payment doesn't cover the accrued monthly interest that time negative amortization comes into picture. In this case borrower has to pay more that they borrowed as they have to pay difference between the minimum payment and the accrued interest is added to the principal.This is called negative amortization.
Negative amortization is also called deferred interest or accrued interest. With a Negative Amortization loan low or moderate income borrowers can afford to become homeowners.
Negative amortization is also called deferred interest or accrued interest. With a Negative Amortization loan low or moderate income borrowers can afford to become homeowners.
[System detected duplicate content, converted into image. Thanks.]
Negative amortization arises when the payment made by the borrower is less than the interest due and the difference is added to the loan balance.