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 interest charged on a loan is greater than the amount of the monthly payment, leading to an increase in the principal balance. In this case, the interest of $925 is greater than the $900 monthly payment, causing the principal balance to increase.

You Made a $900 Mortgage Payment