Monday, December 11, 2006

How Did My Loan Balance Increase?

Wow~! Take a look at these stats on negative amortization (or "pay option") mortgages in today's L.A. Times. This real estate stat is a bit scary - if the individual is unaware of the possible effect of just paying the minimum payment each month.

    New negative amortization mortgages in California:
  • 2003 -- 8 of every 1,000
  • 2005 -- 1 in 5
  • 2006 -- 1 in 3

Note: To all with this type of loan - Negative amortization starts when the mortgage payment is smaller than the interest due and that causes your loan balance to increase rather than decrease. Not sure if your loan has negative amortization - usually you can find an 800 number on your statement each month to call and ask questions.

No comments: