home loan amortization

My negative amortization loan?

I have a negative am loan which i was tricked into getting by my broker but thats another story, anyways my wife loves this home and i do not want to sell it but im afraid i wont be able to afford it if i were to refinance at the current rate, i have 2 more years before i can refinance without a penalty and i currently have about 90k in equity. What can i or should i do?? whats a great loan thats out there that can help me out until i can better stabilize myself economically, my wife is going to school and works part time so i cannot afford a higher payment now, she should finish school in about 1 1/2 years and might be better off financially then. What is a good loan that can help me out and have a low payment and not negatively amortisize??

The advantage of a negative am loan is that it keeps your payments low, and it sounds like you need low payments right now. I think that your best course of action is to keep your current loan for the next two years until the prepayment penalty expires. At that point, your wife will be working and you’ll be in a position to handle a larger payment. You will then be able to replace the negative am loan with a conventional loan that may have a higher payment but won’t result in negative amortization. In the meantime, you have 90K in equity so you’re not in danger of running out of equity. I think you may have made the right decision when you chose that negative am loan.

The only proviso to the above is this: in the unlikely case that the rate on your negative am loan is very high, then you could to reduce your payments by refinancing. But the current rate for a 30-year mortgage is around 6.4%, so your rate would have to be quite a bit higher than that to justify refinancing now.

home loan amortization