A negative amortization home loan or commercial property loan is sometimes the only option for those who do not have much money to put towards a monthly mortgage payment. The monthly payment on a negative amortization mortgage is often not enough to cover the interest payment. The lender then takes the unpaid portion of the interest and adds it to the principal.

In many cases, this can create a situation where you owe more on the property than the actual property is worth. For this reason, it's important that you consider options carefully before you agree to a negative amortization loan.

You may want to consider a real estate negative amortization mortgage if:

1. You are a new business owner without much startup capital. In the initial stages of your business, a negative amortization mortgage allows you to have a place to operate business while making minimum payments. As your income grows, you can do more to pay off the loan.

2. You don't plan to stay at the property for a long time and want to minimize costs before you sell for a profit.

3. You're in an area with rising property values.

Action Steps
The best contacts and resources to help you get it done

Decide if a real estate negative amortization loan is right for you

Before you jump into this type of loan, you should look at negative amortization mortgage information to learn the positives and negatives. You should also compare rates to make sure that you get the best deal.

I recommend: Mortgage-X has a number of calculators that can show you how much you'll really owe if you decide on a negative amortization loan. MortgageLoan.com allows you to see the average rates of different lenders.

Look for a negative amortization mortgage provider to get your loan

If you've decided that you want to apply for a negative amortization loan, start by looking at companies that specialize in this type of loan.

I recommend: OptionArmConsultants.com has a quick form that you can fill out to see if you prequalify for a loan. Nationwide Mortgages can also help you get a negative amortization mortgage.

Apply for a negative amortization mortgage from your bank

Negative amortization mortgages are risky for banks, and you'll find that many banks no longer offer them. This can make it difficult to find the funding you need. Ask your bank if they offer these types of loans.

I recommend: Countrywide is a nationwide bank that offers a variety of reverse mortgage loans. You may also be able to get a mortgage through Liberty Mortgage Services.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  It's usually risky to get a negative amortization home mortgage or commercial mortgage. There is a high chance that you will lose money on your investment. While the low monthly payments may seem attractive, it's best to try to pay all interest and a part of the principle each month.