Negative amortization has the effect of:
A)extending the number of payments to pay off the mortgage.
B)decreasing the number of payments to pay off the mortgage.
C)a lower escrow account.
D)lower interest rates.
E)a lower down payment.

Question

Quizplus · Accepted Answer

Negative amortization occurs when the monthly payments on a mortgage are not enough to cover the interest due, leading to a buildup of unpaid interest that is added to the principal balance. This can make the balance on the loan increase over time, even though the borrower is making regular payments. As a result, it can extend the number of payments needed to pay off the mortgage.

Negative Amortization Has the Effect Of