Difference Between Negative Amortization and A Reverse Mortgage
A negative amortization mortgage should not be confused with a reverse mortgage. A negative amortization mortgage is a mortgage where the principal increases throughout the early stage of the mortgage. This early stage is known as the negative amortization or NegAm period. During this time period the borrower is, in effect, making partial payments toward his mortgage. The remainder of his payment, which he is not paying, is added on to the amount owed on the mortgage. Naturally, when this period ends, he must start to pay this additional amount off, along with his original principal.
A reverse mortgage happens when a homeowner, usually a retired person, sells some or all of his equity in his home and retains the right to live there. No payments are due until the homeowner sells the house, moves out of the house, or dies. However, all the interest charged on the loan is applied back to the principal, since no interest payments are made during the life of the loan.
Read more about this topic: Negative Amortization
Famous quotes containing the words difference between, difference, negative, reverse and/or mortgage:
“To be honest, I knew that there was no difference between dying at their years old and dying at seventy because, naturally, in both cases, other men and women will live on, for thousands of years at that.... It was still I who was dying, whether it was today or twenty years from now.”
—Albert Camus (1913–1960)
“There is singularly nothing that makes a difference a difference in beginning and in the middle and in ending except that each generation has something different at which they are all looking. By this I mean so simply that anybody knows it that composition is the difference which makes each and all of them then different from other generations and this is what makes everything different otherwise they are all alike and everybody knows it because everybody says it.”
—Gertrude Stein (1874–1946)
“Parents need to recognize that the negative behavior accompanying certain stages is just a small part of the total child. It should not become the main focus or be pushed into the limelight.”
—Saf Lerman (20th century)
“They shall beat their swords into plowshares, and their spears into pruninghooks: nation shall not lift up sword against nation, neither shall they learn war any more.”
—Bible: Hebrew Isaiah, 2:4.
The words reappear in Micah 4:3, and the reverse injunction is made in Joel 3:10 (”Beat your plowshares into swords ...”)
“The mortgage is still in our name but, increasingly, the house is theirs. One diaper, one vote.”
—Fred G. Gosman (20th century)