Posted on: 09th Oct, 2006 06:52 pm
Post Your detailed question here.
Hi,
3-2-1 buydown is not a negative amortization loan.
3-2-1 buydown is not a negative amortization loan.
Hi Chuhaloff,
In case of a 3-2-1 buy down mortgage, the interest rates for the first 3 years and that of the 4th year to the entire loan period are predetermined. But negative amortization loans are those in which the borrower makes monthly payments that add up to less than the interest due. The unpaid interest is added to the outstanding loan balance which thereby increases instead of reducing to a lower value. So, the 3-2-1 or any buydown mortgage is not a negative amortization loan.
Know How Buydown mortgages work and get an idea of Negative Amortization from our resources.
Thanks,
Caron.
In case of a 3-2-1 buy down mortgage, the interest rates for the first 3 years and that of the 4th year to the entire loan period are predetermined. But negative amortization loans are those in which the borrower makes monthly payments that add up to less than the interest due. The unpaid interest is added to the outstanding loan balance which thereby increases instead of reducing to a lower value. So, the 3-2-1 or any buydown mortgage is not a negative amortization loan.
Know How Buydown mortgages work and get an idea of Negative Amortization from our resources.
Thanks,
Caron.