| NEGATIVE AMORTIZATION MORTGAGE |
What Is A Negative Amortization Mortgage |
A negative amortization mortgage is generally done where a buyer has a large amount of equity in their home and they are willing to allow the mortgage balance to increase in order to substantially lower their payment. A Negative amortization loan is similar to an interest only option in that the person is only paying interest on the loan. The difference is that one is not paying enough interest to cover the actual interest cost of the mortgage. The interest that they are not paying is being added to the mortgage balance. The person will ultimately owe more on the home than the balance when they initially began. The positive aspect is that the payment is substantially lower than even an interest only mortgage. The negative is that you are actually increasing the balance of ones mortgage. This type of financing would be used for a person who is planning on selling their home in the next few years and would like a substantially lower payment in the mean time. This is only available for a person with a large amount of equity in their home. It is beneficial to a person who is going to per se retire in two or three years. We look forward to serving you. |
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