Negative Amortization Loan

Negative Amortization Loan programs, which were once available to only the wealthiest of a bank's customers due to their ability to allow borrowers to defer interest, are now being marketed to more "conventional" self employed borrowers, business owners, and beneficiaries of passive income, investment income, rental income or even substantial bonus or commission income.

When they were originally introduced, negative amortization loan programs were marketed under names such as "deferred interest mortgage" or "payment cap ARM", which very accurately reflect the nature of these "neg-am" mortgages, which are very powerful tools intended for homeowners with a certain degree of financial sophistication. While reverse mortgages are one type of negative amortization loan, the sort which have received the most press and the widest number of names are the so called "pay option" negative amortization loan program, which allows borrowers to choose each month whether or not they will defer or pay down the interest due on their mortgage.

As negative amortization loans have entered the mainstream in recent years, they have shed their "technical" sounding names and have been marketed to consumers under a nearly countless number of different monikers.

Here is a list of some of the most popular names for negative amortization loan programs, compiled by mortgage professionals from across the industry, although no opinions are expressed or implied about these loans or the companies who market them. This is just a list of names for nagative amortization loan programs:

Pick a Pay

Fixed Pick a Pay

Fixed Rate Pick a Pay

Equity Builder

Pick a Payment

Pick Your Payment

Smart Choice

Secure Advantage

Deferred Interest Mortgage

Minimum Payment Loan

Pay Option

Minimum Payment Option

Pay Option ARM

Minimum Payment Option ARM

Flex 5

Flex Option

Flex Pay Option

Negative Amortization Mortgage

Neg-Am Loan

NegAm Home Loan

Smart 30 Mortgage

Cash Flow ARM

1 Month MTA

1 Month ARM

MTA Option ARM

Fixed Rate Option ARM

Fixed Option ARM

Fixed Pay Option

Secure Advantage

Power Option ARM

Power Fixed 30

Self Employed Cash Flow Loan

Investor ARM

Negative Mortgage

COSI ARM

One Percent Mortgage

1% Mortgage

Payment Advantage Mortgage

Deferred Interest Home Loan

Payment Cap ARM

0.25% Option ARM

12 MAT Mortgage

Cash Flow Advantage

Cash Flow Construction Loan

Interest Only (misnomer)

Lower Than Interest Only

5 Year Fixed Pay Option

30 Year Fixed Rate Option ARM

Quicken Smart Loan

Investor Loan

Fixed Negative Amortization Loan

Graduated Payment Mortgage

GPM

3-2-1 Buydown (no negative amortization if buy down account is fully funded)

2-1 Buydown (no negative amortization if buy down account is fully funded)

1-1 Buydown (no negative amortization if buy down account is fully funded)

Reverse Mortgage

Option Payment

Flexible Payment Loan

Scheduled Negative Amortization Loan

1% Loan

Monthly Adjustable Rate Mortgage

FlexPay

Negative Equity Loan

OptPay ARM

5 Year Cashflow Loan

Deferred Interest Loan.

Managed Mortgage Amortization Loan

Pay Advantage Plus

The negative amortization loan may increase your principal balance when your monthly payment is below the interest accrued on your loan that month.

All NegAM home loans eventually require full repayment of principal and interest according to the original term of the mortgage and note signed by the borrower.

Despite recent changes in the secondary market regarding negative amortization loans, there are still excellent negative amortization programs available for consumers.

These pay option arms can be very good for some borrowers (especially those who are self employed with a flucuating income). This can be a very volatile product so any borrower choosing to accept this loan should be in tune with their finances at all times.

» DISCLAIMER: The information contained in this article on 'Negative Amortization Loan' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.