If you have an adjustable rate mortgage you may have experienced what is called deferred interest. This occurs when the payment made is not enough to cover the interest due durring that month.

This is also referred to as "Neg Am" or negative amortization. The interest that is not covered by the payment is added to the principal balance of your mortgage

When you refinance such a loan all the deferred interest that has been building up is recast as part of the loan creating a potential tax deduction windfall for you. Be sure to consult with your tax specialist partner who can explain these valuable tools to you.

Investors often use deferred interest to their advantage. By taking a loan that defers interest it increases the cashflow. This allows you to use the money right now instead of later. Deferred interest can be your best friend if used correctly.

 

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