Real estate

Expert Insights: What Is Amortization and Negative Amortization?

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When you amortize a loan you basically pay off the principal by making regular installment payments. This typically takes place gradually over several years.

Negative amortization is when the mortgage payment is smaller than the interest that is due, which causes the loan balance to increase rather than decrease. Negative amortization only happens with adjustable rate mortgages (ARMs) with certain features, including an initial payment that does not cover the interest due, a feature that is supposed to increase the affordability of the loan.

With negative amortization, a persistent rise in interest rates reduces the equity in the house unless the negative amortization is offset by house appreciation.

Negative amortization has to be repaid, which means your payment will rise in the future. The larger the negative amortization, the more you will be required to amortize the loan in full.

 

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Real Estate 2016, Santa Clarita Valley, Uncategorized

Santa Clarita Real Estate Statistics June 2016

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To take advantage of this seller’s market contact #agentclara today.

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Real Estate 2016, Santa Clarita Valley

May 2016 Santa Clarita Real Estate Stats

The Santa Clarita Valley continues to thrive as inventory of homes for sale are few

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Real Estate 2016

March 2016 Santa Clarita Valley Real Estate Statistics

 March 2016 #santaclaritarealestate statistics…we need more homes to sell !!! Thinking of selling? Take advantage of this seller’s market …contact #agentclara today.
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Real Estate 2016

Santa Clarita Valley February 2016 Real Estate Home Sales Stats

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