Negative Amortization
Definition of "Negative amortization"
Increase in the outstanding loan balance arising when the mortgage payment does not fully meet the interest charge on the loan. This occurs under indexed loans or when the indexed rate change does not impact the period debt service payments. Lower monthly payments are available with negative amortization loans, and most often, borrowers who take this risk are buying in markets with extremely high prices. many gamble that their home will appreciate enough to cover the difference between their payments and the new loan amount.
Popular Real Estate Terms
City apartment building that is overcrowded, poorly constructed or maintained, and generally part of a slum. In law, a tenement also refers to possessions of an individual that are ...
Cash flow before subtracting income taxes. ...
Obligation taken on by a person who did not obtain it originally, but agrees to honor the terms of the existing obligation as a condition for the transaction. By assuming the loan rather ...
Latin for by itself. A per se matter is one that is alone and not connected to another matter. For example, age, per se, is not a determinant of health. ...
Reduction of part of the balance of property by charging an expense or loss account. The reason for a write-down is that some economic event has occurred indicating that the asset's value ...
The maximum pre-approved amount that an individual or business can borrow without preparing a new credit request. It is a safety buffer in the event funds are needed for unexpected ...
Value of a company's or person's name and reputation, As a result, the business will have a competitive edge, and generate better-than-typical future earnings. ...
Money set aside for a possible loss, such as from a fire. ...
The term ad valorem comes from Latin, and its literal translation is “according to value”, which makes the ad valorem tax definition easy to understand. Defining ad valorem tax ...
Have a question or comment?
We're here to help.