FinanceNook.com™
Your One-Stop Quality Finance Article Source 		 
Submit Your Articles On Auto-Pilot
Automatically submit your articles to thousands of publishers - save time, and get massive publicity for your website! CLICK HERE!

Negative Amortization and Interest Only Option Mortgages

Authored By: Jason P Bertrand

An interest only option mortgage loan is a mortgage that only requires one to pay the interest portion of ones mortgage payment. An interest only option is an attachment to another type of loan. Either a fixed rate or an adjustable rate mortgage can have an interest only option.

The interest only option allows the appreciation of the home to build equity instead of making payments to reduce the principal. For instance, after making payments in a $300,000 home for 5 years one may have a balance of $280,000. If the house appreciated to $320,000 one would now have $40,000 in equity. An interest only option in the same scenario would have a balance of $300,000 and $20,000 in equity. The difference is that the payment on the fixed rate mortgage would be much higher than that of an interest only as part of the payment is paying principal. With the interest only, one would have paid roughly $7,000 less in payments and would have a much lower payment.

In this scenario the buyer is utilizing the appreciation of the house instead of their own money to earn equity. This is a good option in a very strong housing market where the home values are increasing very dramatically and very quickly.

A negative amortization mortgage is generally done where a buyer has a large amount of equity in their home and they are willing to allow the mortgage balance to increase in order to substantially lower their payment. A Negative amortization loan is similar to an interest only option in that the person is only paying interest on the loan. The difference is that one is not paying enough interest to cover the actual interest cost of the mortgage. The interest that they are not paying is being added to the mortgage balance. The person will ultimately owe more on the home than the balance when they initially began.

The positive aspect is that the payment is substantially lower than even an interest only mortgage. The negative is that you are actually increasing the balance of ones mortgage. This type of financing would be used for a person who is planning on selling their home in the next few years and would like a substantially lower payment in the mean time. This is only available for a person with a large amount of equity in their home. It is beneficial to a person who is going to retire in two or three years.

Copyright 2006 Jason P Bertrand

Jason Bertrand is the President of JPB Financial Services, Inc., a Connecticut Corporation and member of the Better Business Bureau. He has over a decade of experience in the financial services industry and is a Notary Public in the State of Connecticut. Please visit the following sites:
www.emortgageloanstore.com
www.businessloansandleasing.com
www.jpbfin.com

Article Source: http://www.FinanceNook.com
Your One-Stop Quality Finance Article Source

Home | Loans | Mortgages-refinance

Read Additional Related Articles from the Mortgages-Refinance Category

Listed below are more articles related to the above article.

People interested in the above article "Negative Amortization and Interest Only Option Mortgages" are also interested in the related articles listed below:

Read more related articles in Home | Loans | Mortgages-refinance
Return Home
FinanceNook.com Home
Featured Sites
Internet Marketing
Website marketing strategies and tips for promoting a business online

Small Business Marketing
How to get more customers or clients than you ever dreamed possible
Social Bookmarking
Bookmark on del.icio.us
Bookmark on Furl
Bookmark on Digg
Popular Articles
Article Listings
RSS Feeds
Article RSS Feeds

FinanceNook.com Home  |  Top of Page
Copyright © 2006 - by Larry Lim, Singapore - FinanceNook.com™: Finance Article Search Engine Directory.
All Rights Reserved. All Trademarks and Servicemarks are the property of the respective owners.

United States of America . United Kingdom . Canada . Afghanistan . Albania . Algeria . American Samoa . Andorra . Angola . Anguilla . Antarctica . Antigua & Barbuda . Argentina . Armenia . Aruba . Australia . Austria . Azerbaijan . Bahamas . Bahrain . Bangladesh . Barbados . Belarus . Belgium . Belize . Benin . Bermuda . Bhutan . Bolivia . Bosnia-Herzegovina . Botswana . Brazil . British Virgin Islands . Brunei Darrusalam. Bulgaria . Burkina Faso . Burundi . Cambodia . Cameroon . Cape Verde . Cayman Islands . Central African Republic . Chad . Chile . China . Colombia . Comoros . Congo . Congo (Dem. Rep.) . Cook Islands . Costa Rica . Côte d'Ivoire . Croatia . Cuba . Cyprus . Czech Republic . Denmark . Djibouti . Dominica . Dominican Republic . East Timor . Ecuador . Egypt . El Salvador . Equatorial Guinea . Eritrea . Estonia . Ethiopia . Falkland Islands and Dependencies . Faroe Islands . Fiji . Finland . France . French Guiana . French Polynesia . Gabon . Gambia . Georgia . Germany . Ghana . Gibraltar . Greece . Greenland . Grenada . Guadeloupe . Guam . Guatemala . Guinea . Guinea Bissau . Guyana . Haiti . Honduras . Hong Kong . Hungary . Iceland . India . Indonesia . Iran . Iraq . Ireland . Isle Of Man . Israel . Italy . Ivory Coast . Jamaica . Japan . Jordan . Kazakhstan . Kenya . Kiribati . Korea (North) . Korea (South) . Kuwait . Kyrgyzstan . Laos . Latvia . Lebanon . Lesotho . Liberia . Libya . Liechtenstein . Lithuania . Luxembourg . Macau . Macedonia . Madagascar . Malawi . Malaysia . Maldives . Mali . Malta . Marshall Islands . Martinique . Mauritania . Mauritius . Mexico . Micronesia (Federated States) . Moldova . Monaco . Mongolia . Morocco . Mozambique . Myanmar (Burma) . Namibia . Nauru . Nepal . Netherlands . Netherlands Antilles . New Caledonia . New Zealand . Nicaragua . Niger . Nigeria . Niue . Norfolk Island . Northern Mariana Islands . Norway . Oman . Pakistan . Palau . Palestine . Panama . Papua New Guinea . Paraguay . Peru . Philippines . Poland . Portugal . Puerto Rico . Qatar . Reunion . Romania . Russia . Rwanda . Sahara . Saint Helena . Saint Kitts and Nevis . Saint Lucia . Saint Pierre & Miquelon . Saint Vincent & The Grenadines . Samoa . San Marino . São Tomé & Príncipe . Saudi Arabia . Senegal . Serbia . Seychelles . Sierra Leone . Singapore . Slovakia . Slovenia . Solomon Islands . Somalia . South Africa . Spain . Sri Lanka . Sudan . Suriname . Swaziland . Sweden . Switzerland . Syria . Taiwan . Tajikistan . Tanzania . Thailand . Togo . Tongo . Trinidad & Tobago . Tunisia . Turkey . Turkmenistan . Tuvalu . Uganda . Ukraine . United Arab Emirates . Uruguay . Uzbekistan . Vanuatu . Vatican City (Holy See) . Venezuela . Vietnam . Yemen . Zaire . Zambia . Zimbabwe


Template Design by Larry Lim | Powered by Article Dashboard

Powered by Article Dashboard