Finance
Negative amortization on a Virginia mortgage occurs when:
AMonthly payments pay off both principal and interest
BThe monthly payment is insufficient to cover the interest due, causing the unpaid interest to be added to the loan balance✓ Correct
CThe interest rate decreases over the loan term
DThe buyer pays extra principal each month
Explanation
Negative amortization occurs when minimum payments don't cover the accruing interest. The unpaid interest is added to the principal balance, causing the loan balance to increase even as payments are made.
Related Virginia Finance Questions
- A Virginia buyer obtains a $300,000 mortgage at a 6% annual interest rate. What is the interest due for the first month?
- A Virginia borrower takes an adjustable-rate mortgage (ARM) with a 2/2/6 cap structure. The initial rate is 4%. What is the maximum rate the ARM can reach over its lifetime?
- In Virginia, a purchase money mortgage is one where:
- Which government-sponsored enterprise (GSE) purchases conforming conventional mortgages in Virginia's secondary market?
- A Virginia seller agrees to pay 3% of the buyer's closing costs as a seller concession on a conventional loan. If the purchase price is $400,000, the maximum concession is $12,000. With an LTV of 80%, what is Fannie Mae's limit?
- Under the Equal Credit Opportunity Act (ECOA), a lender in Virginia may NOT discriminate in lending based on:
- A Virginia buyer obtains an FHA loan. Which statement about FHA loans is correct?
- A Virginia lender who is 'portfolio lending' means they:
Practice More Virginia Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Virginia Quiz →