Finance
A Colorado borrower asks about 'negative amortization.' This occurs when:
AThe borrower makes more than the required monthly payment
BThe monthly payment is less than the interest owed, causing the loan balance to increase✓ Correct
CThe property value decreases below the loan balance
DThe interest rate is reduced below the original rate
Explanation
Negative amortization occurs when a borrower's payment is less than the monthly interest charge, causing unpaid interest to be added to the loan principal, resulting in the loan balance growing rather than decreasing.
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