Mortgage Dictionary: Definition of Negative Amortization
Here is the definition for 'Negative Amortization'. To show a different definition, select a term from the dropdown text box. The online mortgage glossary will display a definition, plus links to related information.
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Negative Amortization
Negative amortization occurs when monthly mortgage payments are too small
to pay all the interest due on the loan. As a result, the loan balance
increases, and the borrower ends up owing more than the original amount
of the loan.
Some mortgages, such as the
graduated payment mortgage, result in negative amortization for
part of the loan term.
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