What is negative amortization?
Does it mean my payments become condensed over time? I understand amortization but am confused about this. In what case would I encounter negative amortization please by rick.landley74389761 from Seaside Park, New Jersey. Jun 3rd 2014
Dave Metsker (DaveMetsker)
#35 ranked lender in Oregon - 2,318 contributions
These loans are rare now, (except for reverse mortgages), due to new laws to protect borrowers. If your monthly payment is less than the monthly interest, any shortage will be added to your principal balance. Short answer: at the end of the year, you will owe more than when you started.
Casey Hansen (CaseyHansen)
#1 ranked lender in Pennsylvania - 135 contributions
The comment below is correct. If you are currently in a loan that is negatively amortizing you may want to considering refinancing out of it. I am licensed in NJ and could help you with this if you are interested. www.nationsloans.com
Edward Fallon (edfallon)
#89 ranked lender in Pennsylvania - 143 contributions
Negative amortization means that the amount you owe increases rather than decreases. It means that your minimum monthly payment is not enough to cover the monthly interest due on the loan and the difference is added to the mortgage.
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