Negative Amortization Cap

Negative Amortization Cap

The maximum amount of negative amortization permitted on an ARM, usually expressed as a percentage of the original loan amount (e.g.,110%).

See Adjustable Rate Mortgage/How the Monthly Payment on an ARM Is Determined/Negative Amortization ARMs.

The Mortgage Encyclopedia. Copyright © 2004 by Jack Guttentag. Used with permission of The McGraw-Hill Companies, Inc.