As you have already understood, negative amortization loan has a few benefits. Several home owners opt for this because the monthly payments are lower than other types of loans and this makes additional interest payment possible. Moreover you will get the flexibility of deciding on lower or higher payments according you what you can afford. Moreover people qualify for negative amortization loans more easily than other kinds of loans.

However, the downside of negative amortization loan is if you pay the minimum payment due every month you stand the chance of losing equity in your property. Another drawback of negative amortization loan is you are likely to owe more money at the end of a month compared to what you did at the start of a month.

Higher principals generally are loaned at lower interests and lower principals at higher rates. Time factor is a great deciding factor and longer period payoffs entail lesser interest per month naturally. But that is a mirage as it is hard to foreclose longer period loans.

Additional payments of even small quantity might save much interest over the period for the borrower. This additional payment of course cuts down on the principal and one can divide straight as to how less time he would require paying the full loan. Thus, one just needs to do simple calculation to find out his monthly payments. Interests are compounded on the principal as the years go by however. One needs to heed to that.