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Glossary of Terms > N > Negative Amortization

Negative Amortization

Some ARMs allow the interest rate to fluctuate independently of a required minimum payment. If a borrower makes the minimum payment it may not cover all the interest normally due at the current interest rate. Essentially, the borrower is deferring the interest payment. The deferred interest is added to the balance of the loan and the loan balance grows larger instead of smaller, which is called negative amortization.

N Terms

Negative Amortization

Negative Amortization Cap

Negative Points

No Change Scenario

No Cost Mortgage

No Doc Loans

No Money Down Mortgage

Non-Conforming Mortgage

Note