Homework Answers
The correct option is A
Negative amortization refers to increase in the principal amount which generally arises when we fail to pay the interest amount due in it.
The regular interest payment will not lead to negative amortization in this only interest payment is included while principal amount remains constant. So, it has constant amortization.
While 30 year and 15 year amortization loam will lead to positive amortization as it the regular payments will include the principal amount and interest payment.
Minimum payment refers to the minimum amount that one has to pay to defer the payments. Regularly making minimum amount doesn't lower the outstanding balance and the interest charged on the remaining amount lead to debt trap which results in negative amortization.
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Question 16 Which of the following adjustable rate mortgage (ARM) options can potentially lead to negative...
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D Question 3 10 pts The "option" ARM allow borrowers to choose their mortgage payment. The minimum payment pays no principal, and less interest than what accrues on the loan. Considera $180,000 loan at 6% interest with 30-year amortization. Below what payment amount, would this loan have negative amortization? That is what monthly payment would only cover the interest? $600 5700 $800 5900 51.000
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