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Negative Amortization Information

Negative amortization mortgages are available from several lenders. Negative amortization mortgages are used on my home and investment property. 

An issue for many is managing income and expenses, or "cash flow". Income varies for many reasons and unplanned expenses come up. For many, our mortgage payment  is our largest expense, and the least flexible. The negative amortization mortgage gives you control over your mortgage payment. Choose one of four payment options each month based on your cash flow needs.

        Minimum Payment    A payment is set for 12 or 60 months at a reduced rate. The minimum payment rate for the 12 month option is 1.00%, and the 60 month option is 1.90%. This maximizes cash flow and may also defer payment of interest allowing flexibility in managing your tax deductions. This minimum payment can not increase by more than 7.5% each year. Negative amortization is the difference between the minimum payment and the interest only payment and is added to your mortgage balance. Read about the important tax considerations of an option arm. If you have concerns over deferred interest, read about the small amount of appreciation required to offset it.

        Interest Only Payment    Defer paying principal and improve cash flow. This option is not available if the interest only payment is less than the minimum payment.

        Fully Amortizing Payment Options    You have the ability to make a principal and interest payment based on either a 30 year or 15 year payment schedule. I have included a negative amortization mortgage statement.

The Option Arm series allows you to choose your index from the 1 month LIBOR or the MTA.

Here is a 10 year average comparison between a 30 year fixed and fully indexed LIBOR, MTA, COFI, and the 1 year Treasury Index in chart form.

Additional Options    If you want the security of a fixed payment while taking advantage of the low payment rates, there is a 5 year fixed payment option. You still have the four payment options to select from to manage cash flow. You may increase the term of your option arm from 30 to40 years lowering your payment further. LTVs are available up to 100%

The Minimum Payment Advantage    The example below is based on a $400,000 mortgage. It compares a traditional 30 year fixed rate payment based on the above 10 year average to the minimum payment  based on the 10 year average. Assumes that the Minimum Payment increases by the maximum 7.5% per year.

                    30 Fixed                           Minimum                             Monthly Savings                    Annual Savings

Year 1        $2,855                                $1,287                                        $1,586                                    $18,816
Year 2        $2,855                                $1,384                                        $1,471                                    $17,652
Year 3        $2,855                                $1,488                                        $1,367                                    $16,404

                                            Savings over 3 years        $52,872
                                            Savings invested at 8%    $56,885

Learn more about negative amortization mortgage closing costs.

I have developed an Adobe document detailing how this program works. Send me an email requesting a copy of "Understanding the Negative Amortization Mortgage".

I have added a website dedicated solely to the Negative Amortization Mortgage

Read very important information about Negative Amortization Prepayment Penalties

Here is a useful negative amortization mortgage payment calculator

Learn more about Loan Modification. If you can not refinance, it may be the best way to save your home today.

As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your consumer and mortgage debt is structured today can have a life changing effect in the years to come.  Read more about this free, no obligation service.

     negative amortizationPrequalify for your negative amortization mortgage.

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