The result has been and will be increased mortgage defaults andforeclosures. Before getting into a negative amortization loan, make sure you fully understand how it works and that it suits your unique situation.
Negative Amortization can arise when calculating the effective rate per payment period if the compound period is shorter than the payment period.When the compound period is different than the payment period, an amortization calculator often uses an effective interest rate, derived from the compound ...
Unfortunately, many of these same borrowers also elected to take outadjustable-rate mortgages, or even worse,option arms, with the latter allowing fornegative amortization. This meant most couldn’t even keep up with monthly payments, or refinance to get payment relief. So they gave up on their...