You made a $900 mortgage payment. The interest of $925 on the mortgage for this month leads to an increase in the principal balance. You have:

Question

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Negative amortization occurs when the mortgage payment is not enough to cover the interest due, causing the loan balance to increase. Since the $900 payment is less than the $925 interest, the principal balance increases, indicating negative amortization.

You Made a $900 Mortgage Payment