Definition of "Negative amortization"

Luis  Pezzini real estate agent

Written by

Luis Pezzinielite badge icon

Pezzini Luxury Homes LA

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.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Terms

Outside wall of a structure that is exposed to the weather. An exterior wall can also be a load bearing wall ...

Provision in a contract that upon a certain occurrence or event the contract is canceled, An example is a contractual term that the written agreement is terminated if one of the party's ...

The accelerated cost recovery system is a depreciation system for tax purposes mandated by the Economic Recovery Tax Act of 1981. In 1986 the Accelerated Cost Recovery System (ACRS) was ...

A special agent in real estate is a real estate agent hired to do a specific task or job, as opposed to a general agent, who is a real estate agent who can do any task he or she is assigned ...

The company is not responsible to a third party if an account or financial instrument is dishonored by the debtor. The creditor's recourse is solely to the debtor's property. An example is ...

Expenditures incurred to initially purchase property, including incidental costs necessary to put the property into existing use and location. This cost is then depreciated over the assets ...

Funds that are retained in an account until a certain event occurs. For example, a downpayment on a contract held until full payment is received whereupon the holding funds are credited to ...

Potential homeowners buy land at a location they like and then build their house on it. ...

Property that is zoned for industrial use, including manufacturing, research and development purposes, factory office and warehouse space, and industrial parks. ...

Popular Real Estate Questions