Finance
What is 'negative amortization' in a mortgage?
APaying extra principal each month
BWhen the loan balance increases because payments don't cover the interest due✓ Correct
CWhen the lender reduces the principal at the end of each year
DA feature allowing the borrower to skip up to 3 payments per year
Explanation
Negative amortization occurs when the borrower's monthly payment is less than the interest accruing on the loan, causing the unpaid interest to be added to the principal balance, increasing the loan balance over time.
Related New Hampshire Finance Questions
- A 'jumbo' mortgage in New Hampshire is a loan that:
- A NH bank appraises a property at $290,000. The buyer offered $305,000. If the lender will loan 80% of the lower of appraised value or purchase price, what is the maximum loan amount?
- A conventional loan typically requires private mortgage insurance (PMI) when the down payment is less than:
- A balloon mortgage requires the borrower to:
- A home equity line of credit (HELOC) in New Hampshire is secured by:
- A NH lender's underwriting process evaluates a borrower's creditworthiness through which primary factors?
- An assumable mortgage in New Hampshire allows:
- New Hampshire does NOT have which of the following taxes?
Practice More New Hampshire Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free New Hampshire Quiz →