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No. You _could_ add funds to a neg am payment and still incur a neg am on
the loan. To avoid the neg am, you have to make the Interest Only payment.
Firstly, if you make the Minimum Payment, you will have a neg am. If you
make a larger payment, you select the Interest Only option. If you make a
larger still payment, you will pay off in 30 years, and the highest payment
will pay off in 15 years. You can add funds to the 15-year payment if you
want and pay off earlier, but if you could do that you would not be a good
client for the loan product or, more accurately, the loan product would not
be good for you.
Why would you make the Min Payment + extra, but not enough to make the
Interest Only payment?
You don't have a neg am UNLESS you make the Minimum Payment, or any payment
that is less than the Interest Only. In theory, you _could_ make the
Interest Only + extra, but below the 30-year payment. This would result in a
principle reduction, but the pay off would still come in 30 years because
they "recast" the principle balance every month to make the payments work
out to 30 or 15 years. Interest Only payments pay the interest that is due,
therefore no interest is added to the principle -- there is no neg am. The
Negative amortization comes when the payment received does not cover the
interest that is due.
"mabdala2006@hotmail.com" <brunoaraujo2004@aol.com> wrote in message
news:1165791764.816195.25310@l12g2000cwl.googlegroups.com...
> Is it true that if you send a extra money with your minimum payment
> option every month, you'll be able to not have a negative amortization?!
>
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Re: 4 payment options
