2006-12-16 06:45:11 · 4 answers · asked by Rachel T. 2 in Business & Finance ➔ Renting & Real Estate
This is when you have a house that is paid off and you have a bank give you money each month against the value of the house.
This can be very good or bad as the bank will charge you interest on the money you take out.
Be careful/
Sonny
2006-12-16 06:50:22 · answer #1 · answered by Sonny 2 · 1⤊ 1⤋
Your monthly mortgage payment doesn't cover the month's interest accrued......let's say your pymt is $660/mo.....interest in one month's time accrues at 788/mo....that means that each and every month, your loan balance increases by $128....and you pay interest on that $128.....interest on interest.......
If someone is offering that as way to get into your own house.......honestly, you can't do it.....you can't afford to own at this time......The worse thing is .......contracts are locked in for 36 months or more.....which means you can't refinance/sell/ without incurring a HUGE PREPAYMENT Penalty.......
Sometimes you just have to say.....I can't afford it yet.....and walk away.
2006-12-16 08:18:29 · answer #2 · answered by Paula M 5 · 0⤊ 0⤋
Negative amortization is latin for time bomb that is going to blowup in your face. Do not do it.
2006-12-16 07:07:38 · answer #3 · answered by Anonymous · 0⤊ 0⤋
You're not paying off your loan, you're more in debt.
2006-12-16 06:52:00 · answer #4 · answered by zocko 5 · 1⤊ 0⤋