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New Course
Concept
Negative Amortization
Negative amortization
occurs when the
payments made on a loan
are insufficient to cover the
interest due
, resulting in an
increasing
loan balance
over time. This situation can lead to higher
long-term costs
for borrowers and potential
financial risk
if the
loan balance
grows beyond the
property's value
or the
borrower's ability to repay
.
Relevant Degrees
Real Estate 100%
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