Skip-Payment Mortgage

A A A

DEFINITION

A mortgage program that allows the borrower to skip (not pay) a mortgage payment. Depending upon the specific lender, there is generally no charge associated with skipping a payment. However, the interest accrued over the skipped-payment period is added to the principal balance of the mortgage, and the remaining amortization schedule is recalculated in a process called "deferred interest" or "negative amortization".

INVESTOPEDIA EXPLAINS

Skip-payment mortgages are not widely marketed in the United States, but they are widely available in other countries, like Canada. Some skip-payment mortgages allow the borrower to skip up to four months of consecutive payments for reasons such as family issues or sickness.


RELATED TERMS
  1. Amortization Schedule

    A complete schedule of periodic blended loan payments, showing the amount of ...
  2. Mortgage

    A debt instrument, secured by the collateral of specified real estate property, ...
  3. Fixed Interest Rate

    An interest rate on a liability, such as a loan or mortgage, that remains fixed ...
  4. Interest Rate

    The amount charged, expressed as a percentage of principal, by a lender to a ...
  5. Negative Amortization

    An increase in the principal balance of a loan caused by making payments that ...
  6. Deferred Interest

    The amount of interest that is added to the principal balance of a loan when ...
  7. Forbearance

    A temporary postponement of mortgage payments.
  8. Mortgage Modification

    A permanent change in a homeowner's home loan terms that makes the monthly loan ...
  9. USDA Non-Streamlined Refinancing

    A mortgage-refinancing option offered by the United States Department of Agriculture ...
  10. No-Appraisal Mortgage

    A type of home loan used for refinancing for which the lender does not require ...
Related Articles
  1. Make A Risk-Based Mortgage Decision
    Options & Futures

    Make A Risk-Based Mortgage Decision

  2. 4 Steps To Attaining A Mortgage
    Credit & Loans

    4 Steps To Attaining A Mortgage

  3. Understanding The Mortgage Payment Structure
    Credit & Loans

    Understanding The Mortgage Payment Structure

  4. 5 Things You Shouldn't Do During A Recession
    Budgeting

    5 Things You Shouldn't Do During A Recession

  5. Forecasting Mortgage Rates: Buy, Sell ...
    Investing Basics

    Forecasting Mortgage Rates: Buy, Sell ...

  6. What counts as
    Credit & Loans

    What counts as "debts" and "income" ...

  7. How does my debt-to-income (DTI) ratio ...
    Home & Auto

    How does my debt-to-income (DTI) ratio ...

  8. Financing Options For Buyers Of Foreclosed ...
    Credit & Loans

    Financing Options For Buyers Of Foreclosed ...

  9. What are the best ways to invest in ...
    Investing Basics

    What are the best ways to invest in ...

  10. Can I buy a house directly from Fannie ...
    Home & Auto

    Can I buy a house directly from Fannie ...

comments powered by Disqus
Hot Definitions
  1. Quanto Swap

    A swap with varying combinations of interest rate, currency and equity swap features, where payments are based on the movement of two different countries' interest rates. This is also referred to as a differential or "diff" swap.
  2. Genuine Progress Indicator - GPI

    A metric used to measure the economic growth of a country. It is often considered as a replacement to the more well known gross domestic product (GDP) economic indicator. The GPI indicator takes everything the GDP uses into account, but also adds other figures that represent the cost of the negative effects related to economic activity (such as the cost of crime, cost of ozone depletion and cost of resource depletion, among others).
  3. Accelerated Share Repurchase - ASR

    A specific method by which corporations can repurchase outstanding shares of their stock. The accelerated share repurchase (ASR) is usually accomplished by the corporation purchasing shares of its stock from an investment bank. The investment bank borrows the shares from clients or share lenders and sells them to the company.
  4. Microeconomic Pricing Model

    A model of the way prices are set within a market for a given good. According to this model, prices are set based on the balance of supply and demand in the market. In general, profit incentives are said to resemble an "invisible hand" that guides competing participants to an equilibrium price. The demand curve in this model is determined by consumers attempting to maximize their utility, given their budget.
  5. Centralized Market

    A financial market structure that consists of having all orders routed to one central exchange with no other competing market. The quoted prices of the various securities listed on the exchange represent the only price that is available to investors seeking to buy or sell the specific asset.
  6. Balanced Investment Strategy

    A portfolio allocation and management method aimed at balancing risk and return. Such portfolios are generally divided equally between equities and fixed-income securities.
Trading Center