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What is another word for negative amortization?

Pronunciation: [nˈɛɡətˌɪv ɐmˌɔːta͡ɪzˈe͡ɪʃən] (IPA)

Negative amortization refers to a financial situation where the loan balance increases over time instead of decreasing. This occurs when the borrower pays less than the interest due on the loan, causing the difference to be added to the principal balance. Synonyms for negative amortization can include "deferred interest", which refers to the accumulation of unpaid interest, "upside-down loan", where the loan amount exceeds the value of the asset it finances, and "graduated payment mortgage", a loan that starts with low initial payment amounts but gradually increases over time. Regardless of the term used, negative amortization can have long-term consequences, making it vital for borrowers to carefully consider their repayment plans.
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What are the opposite words for negative amortization?

The opposite of negative amortization, a term used to describe a situation where a loan's principal balance increases rather than decreases over time, is positive amortization. Positive amortization occurs when a borrower makes payments that cover both the interest and principal of a loan, resulting in a reduction of the outstanding balance. This approach offers a more long-term sustainable and affordable option for borrowers as interest rates and principals are paid down over time. However, negative amortization loans can be beneficial for those who cannot afford to make full payments in the short term but need to access capital. Understanding the difference between positive and negative amortization is essential when seeking or providing loans.

What are the antonyms for Negative amortization?

Famous quotes with Negative amortization

  • I had a couple come in with a negative amortization mortgage on a house that costs way too much relative to their income. They're consuming real estate, not investing in it.
    Chris Cooper

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