When there is an increase in the loan balance due to payments less than the interest charge on an adjustable rate mortgage,the result will be:

Question

Quizplus · Accepted Answer

When payments are less than the interest charge on an adjustable rate mortgage, it can result in negative amortization, which means the loan balance increases over time rather than decreases as it should with regular payments. This can lead to financial difficulties for the borrower and may result in foreclosure if the situation is not resolved. Therefore, option A is the best choice.

When There Is an Increase in the Loan Balance Due