"Negative Amortization"

              Negative amortization occurs when the monthly payments are not large enough to pay all of the interest that is due on the loan.  The unpaid interest is then added to the balance of the mortgage.  The danger of negative amortization is that the homeowner can end up owing more than the original amount of the loan.  There are two types of negative amortization.  Graduated payment mortgages have scheduled negative amortization, while adjustable rate mortgages have a chance of amortizing negatively.  There is usually a limit by which the loan balance can increase over the life of the loan.  Negative amortization loans are best suited for borrowers with a large savings or seasonal businesses, who want the option of lower payments during certain months, but plan to pay larger amounts when they are able.