Finance
What is 'negative amortization'?
AA loan paid off faster than scheduled
BA situation where the loan balance increases because the payments are too small to cover the interest due✓ Correct
CA penalty for early mortgage payoff
DA government program reducing mortgage balances
Explanation
Negative amortization occurs when the minimum payment on a loan does not cover the full interest charge, causing the unpaid interest to be added to the loan balance. The borrower ends up owing more than they originally borrowed.
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