Are there benefits of negative amortization mortgage loans?


The benefits of negative amortization mortgages could be substantial if the consumer is financial savvy, and interested in finding the mortgage product that best suits their situation.

General Benefits of Negative Amortization Home Loans

  • Borrowers are easier to qualify for a larger loan amount - the housing expense ratio will be based on lower monthly mortgage payments, therefore consumers can take out larger loans. This can be particularly beneficial for high cost metropolitan areas - California and New York, to name two.
  • Borrowers with seasonal or commission income will be relieved to take advantage of minimum payments once in a while;
  • Business entrepreneurs will have more free cash when the business needs it;
  • Homeowners who plan to move out before the loan is recast don't need to pay principal and a Neg Am loan is a great advantage for them;
  • Real estate investors also don't need to have their cash locked in big mortgage payments.

However, before you sign a deferred interest loan agreement make sure you know and understand all the mortgage terms. The advantages of negatively amortizing mortgages are huge but it takes understanding and desire to handle the specific features of those loans.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
Was this Mortgage QnA helpful?
Not at all
  • Currently 2.9/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA: