The speaker provides an explanation of what a negative amortization loan is. He mentions that they keep your monthly payments low by increasing your outstanding loan balance up to maximum limit. These loans are commonly referred to as payment option ARMS or neg am loans. He suggests that this loan can be a good program if you completely understand how it works. Many small business owners who need to control their cash flow will use programs such as these. During the home price boom, many investors would use a negative amortizing loan to keep their carrying costs low in anticipation of increasing home values.
