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  Negative Amortization Definition
Negative Amortization This occurs when your mortgage balance is going up instead of down due to the fact that the monthly payments you're making on your home are not enough to cover all of the interest and any of the principal of your loan. When you make a payment and you don't pay enough money to cover the interest on the loan, the excess interest is added to your loan's balance. This is likely to happen with loans that have payment caps.

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