Negative Amortization

Definition:   a financing arrangement in which the monthly mortgage payments are less than required to pay both interest and principal.  The unpaid balance is added to the loan balance.

Pronunciation:   \ˈne-gə-tiv\ \ˌa-mər-tə-ˈzā-shən also ə-ˌmȯr-\

Used in a Sentence:   Negative amortization occurs when the mortgage payments are not large enough to cover the interest expense.

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