Finance
In Hawaii, what is 'negative amortization'?
AA. When the loan balance decreases faster than expected
BB. When monthly payments are less than the interest owed, causing the loan balance to increase✓ Correct
CC. When the property value decreases faster than the loan balance
DD. When the interest rate is below the rate of inflation
Explanation
Negative amortization occurs when the monthly payment is insufficient to cover the interest accruing on the loan, so the unpaid interest is added to the principal balance.
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