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July 22, 2006
Negative Amortization Loans: Deferred Interest Mortgages Can Help You Finance Your Dream
Negative amortization, or "deferred interest," describes loans that have payment adjustment caps in addition to interest rate adjustment caps. Negative amortization loans calculate two interest rates. The first is called the payment rate the second is the actual interest rate. The payment rate is typically capped at 7.5% of the previous payment. The true interest rate is calculated as simply the index plus the margin without periodic caps. When the interest rate resets to a higher rate with a negative amortization Adjustable Rate Mortgage (ARM), the mortgage payment doesn't change. Instead, the additional interest expense is added to the loan
From Negative Amortization Loans: Deferred Interest Mortgages Can Help You Finance Your Dream
Posted by Murray at July 22, 2006 05:40 PM
