Possible negative amortization resulting from a rise in the interest rate on a adjustable rate mortgage may be avoided by

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Increasing the monthly payment will prevent negative amortization by ensuring that the interest and principal portions of the payment are fully covered, even if the interest rate has risen. Raising the rate cap or lowering the payment cap may provide temporary relief but will not address the underlying issue of insufficient payment to cover the interest cost. Shortening the term of the mortgage may increase the monthly payment but may not be feasible or desirable for the borrower.

Possible Negative Amortization Resulting from a Rise in the Interest