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Company Loan Type APR Est. Pmt.

payment option arm

Posted on: 31st Mar, 2007 01:24 pm
can payment option arm result in negative amortization if I make only minimum payments and when is the loan recalculated? Perry S. Marshall
"can payment option arm result in negative amortization if I make only minimum payments"
On a payment option ARM if only minimum payments are made which are not sufficient to include all the interest due then all the unpaid interest is added to principal & the person owes more than what was originally borrowed, also called as negative amortization.
Posted on: 31st Mar, 2007 01:48 pm
Your mortgage will normally be recalculated every five years but can also be different as per your loan terms. You will still have the option to make minimum payments after the recalculation occurs.

Payment can also be recalculated if loan balance becomes 125% of the original, like if a $150,000 mortgage because of negative amortization grows to $187,500 (125% of $150,000), payments will get recalculated.

Miller
Posted on: 31st Mar, 2007 02:33 pm
Hi Psm,

Negative amortization can occur for option arms, you can read more about option arms from this page: http://www.mortgagefit.com/discuss/option-arm.html

Thanks
Blue
Posted on: 24th Apr, 2007 02:59 pm
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