Which one of these situations creates negative amortization?
A)When the amount of the monthly mortgage payment increases
B)When the monthly mortgage payment does not cover the interest owed
C)When the amount paid into an escrow account decreases
D)When the mortgage interest rate decreases
E)When the amount of the down payment is lowered

Question

Quizplus · Accepted Answer

Negative amortization occurs when the monthly mortgage payment is not enough to cover the interest owed, causing the unpaid interest to be added to the loan's principal balance.

Which One of These Situations Creates Negative Amortization