Occurs when your monthly payments are not large enough to pay all the interest due on the loan. This unpaid interest is added to the unpaid principal balance of the loan. Also called negative amortization. The danger of negative amortization is that the homebuyer ends up owing more than the original amount of the loan.
Whether you are buying, refinancing, investing, or considering how to use your home equity, the first step is a conversation about your goals and the available options.