Home > Glossary > Negative Amortization Cap
Meaning / Definition of
Negative Amortization Cap
Categories: Loan and Mortgage, Credit and Debt, Real Estate,
The maximum amount of negative amortization permitted on an ARM, usually expressed as a percentage of the original loan amount (e.g., 110%). Reaching the cap triggers an automatic increase in the payment, usually to the fully amortizing payment level, overriding any payment increase cap.
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