Negative Amortization

Because of the lower initial monthly payments, there may be negative amortization during the first year(s) of the loan. Negative amortization occurs when the scheduled payment does not cover the entire interest rate charge. The unpaid interest is added to the principal balance, creating negative amortization.

GPM loans are rarely available today, because their benefits and advantages do not really offset their costs and disadvantages. Again, most home buyers will discover that they are better off with a Temporary Buy-Down program or a standard 30-year fixed-rate loan, rather than the GPM.

We hope that you've found our Mortgage and Real Estate Resource helpful and informative. We welcome all comments, critiques and suggestions; please send emails to [email protected]. Remember that whether your are buying a home or an office building, you are investing in real estate. As with all investments, the best investors are those who can gather the most knowledge, tools and resources. Regardless of whether you use our lending services, please spread the word about our resource center to anyone you know who may benefit from our site.

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