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Negative Amortization Definition

Negative amortization is an increase in the principal balance of a loan caused by a failure to make payments that cover the interest due.

Negative amortization is an increase in the principal balance of a loan caused by a failure to make payments that cover the interest due. The remaining amount of interest owed is added to the loan. Pros And Cons Of Owning Rental Property Qualified VS Non Qualified Mortgage Non-Qualified Mortgage / Non-QM Loans – Non-Prime Lenders.

Negative Amortization What it is: negative amortization occurs when the principal balance on a loan (usually a mortgage ) increases because the borrower’s payments don’t cover the total amount of interest that has accrued.

A negative amortization occurs when the borrower makes a payment that is less than the accrued interest and the difference is then added to the balance of the loan. The term amortization by itself simply refers to the reduction in the loan balance; for instance, the amount of the loan that the borrower still owes the lender .

Definition of negative amortization: Anomalous situation in which the principal amount increases with the payment of monthly installments. It occurs typically in graduated payment mortgages (gpm) designed to accommodate young executives.

negative amortization noun the increase of the principal of a loan by the amount by which periodic loan payments fall short of the interest due, usually as a result of an increase in the interest rate after the loan has begun.

Negative Amortization Law and legal definition negative Amortization is the 1)Interest on a loan that is added to the principal balance. For example, interest may accrue on a student loan while the debtor is in school, which is then added to the principal on the loan.

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