Definition: Negative amortization occurs when the monthly payment is less than full interest and does not pay any principal. The interest that is unpaid accrues and the principal balance owed increases.
At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.
Examples:
If you borrowed $10,000 at 8% interest and paid $50 the first month, after 30 days you would owe $10,016.67.
