A term every home buyer, real estate agent, homeowner should know

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

DEAR BOB: I am a new real estate sales agent. As mortgage interest rates slowly rise, I've seen mortgage lender ads that say, "No negative am." What does that mean? – Cheryl R. DEAR CHERYL: "Negative amortization," also known as "negative am," is a very important mortgage term every home buyer, real estate agent, and refinancing home owner must understand. Purchase Bob Bruss reports online. Mortgage negative amortization can only occur with an adjustable-rate mortgage (ARM) when the interest rate adjusts more frequently than the borrower's payment adjusts, or the indexed interest rate rises faster than the borrower's monthly payment increases. For example, most ARMs have monthly payments that are "locked" for one to 10 years. Many have fixed monthly payments for the first three to five years. However, if the ARM interest rate adjusts monthly, semi-annually, or annually--although the borrower's monthly payment remains constant--if the interest rate rises, the unpaid interest is a...