What is a negative amortization loan and is it a good way to lower my monthly payments?
A negative amortisation loan is really for the sophisticated borrower. An example of a negative amortisation loan, in its simplest terms, is the following: Let’s take that example of a $5,000 loan. If you go out and get a negative amortisation loan, and you’re not making enough interest payments to the bank, they will actually add that money on a monthly basis towards your mortgage. Yes, I can get you a very cheap payment, but it’s just going to be tacked on to the mortgage. A negative amortisation loan is not a very good loan for probably 95% of the consumers that are out there.
