Are negative amortization loans or Option ARMS bad?
The past few years have spawned the proliferation of Option ARM loans, where you have the option of paying a minimum payment, interest only payment or fully amortized payment. For many people, this loan allowed people to get into a house they wouldn’t have otherwise been able to qualify for. The “bad” aspect of these loans is the minimum payment is only good until the negative amortization causes the principal balance to reach 100-110% of the original loan amount.