How bad is it? Is it better to finance to get out of Negative Amortization loan paying the prepayment penalty fee or stick with it?Please help. And thank you for everyone for answering.
4 Comment(s)
A Penny a day a dollar a day a quarter a day whatever just save for the day.
i am a mortgage broker, and the answer needs more info, but in short the neg am loan you have has a interest rate that is being charged, if you can refi with a better rate then the savings will come down the line that will be worth paying the fees to get out of it as rates are really good right now. but to know that i would need to know, the loan amount, the rate charged not the neg am rate but the actual rate, and the amount odf the pre-payment penalty to know what is best for you. you can contact me at money_for_sell at yahoo.com and i would be glad to see what can be done or you may find sometiumes it is better to wait. but to know i would need more info.
Negative Amortization occurs when loan payments are not enough to cover the amount of interest due for that payment period. The unpaid interest is calculated and added to the total loan amount, increasing your outstanding balance.
Stick with it – but do everything to get more money / funds so that you can pay your loan amortization as it became due.
I am an accountant. Generally, I believe a neg am loan is a terrible deal for most people who just want to finance a house for any significant length of time. It might have its place in certain complex short term financings, but over the long haul it makes you poorer. The reason for this is that you accrue more interest than you are paying, making your debt grow and causing your net worth to decrease over time.
If you can possibly get out of that loan without too crazy a prepayment penalty, then by all means get out.
Just curious: did you fully understand the terms before you committed to the loan?
A Penny a day a dollar a day a quarter a day whatever just save for the day.
UnothissFabrezyTrid | Oct 23, 2009 | Reply
i am a mortgage broker, and the answer needs more info, but in short the neg am loan you have has a interest rate that is being charged, if you can refi with a better rate then the savings will come down the line that will be worth paying the fees to get out of it as rates are really good right now. but to know that i would need to know, the loan amount, the rate charged not the neg am rate but the actual rate, and the amount odf the pre-payment penalty to know what is best for you. you can contact me at money_for_sell at yahoo.com and i would be glad to see what can be done or you may find sometiumes it is better to wait. but to know i would need more info.
explosurenet | Oct 26, 2009 | Reply
Negative Amortization occurs when loan payments are not enough to cover the amount of interest due for that payment period. The unpaid interest is calculated and added to the total loan amount, increasing your outstanding balance.
Stick with it – but do everything to get more money / funds so that you can pay your loan amortization as it became due.
rmjavier94 | Oct 26, 2009 | Reply
I am an accountant. Generally, I believe a neg am loan is a terrible deal for most people who just want to finance a house for any significant length of time. It might have its place in certain complex short term financings, but over the long haul it makes you poorer. The reason for this is that you accrue more interest than you are paying, making your debt grow and causing your net worth to decrease over time.
If you can possibly get out of that loan without too crazy a prepayment penalty, then by all means get out.
Just curious: did you fully understand the terms before you committed to the loan?
Selectahh | Oct 28, 2009 | Reply