Principal of mortgage increases while payments made

Any situation where the principal of the mortgage increases while payments are being made is known as:

  1.  negative equity
  2.  home equity line of credit
  3.  a positive capitalization rate.
  4.  negative amortization.

The answer is D.  A fully amortized loan pays off the principal in a fixed time.  A negatively amortized loan, however, does not pay off any principal and only pays interest.  This means that the monthly payments are lower for a negatively amortized loan than for a fully amortized loan.