Negative Amortization at Real Estate Glossary

What is it? The situation occurs when a borrowers monthly payment is not large enough to cover both the principal and interest of a loan. As a result, the outstanding balance of the loan actually grows larger with each payment rather than smaller. Most fixed-rate loans are not subject to negative amortization, but many adjustable-rate mortgages are susceptible.

Real Estate Definition Added By: Marissa

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