Finance
Negative Amortization
A concise definition for the California Real Estate Exam study guide.
Definition
Occurs when scheduled payments are insufficient to cover accrued interest, causing the loan balance to INCREASE over time. Common with certain ARM payment options.
Why it matters on the California real estate exam
Know the definition, recognize how the term appears in a fact pattern, and compare it with related concepts before choosing an answer.
Study this topic in context
Read the related chapter for the surrounding concepts, examples, and exam tips.
Chapter 5: Finance, Mortgages & Loan Types →