Graduated Payment Loans
Graduated payment loans are type of fixed rate mortgage for which the payments increase gradually from an initial low base level to a higher final level. Usually the payments will increase from 7 to 12 % annually from their initial base payment until the full payment amount is reached.
A graduated payment mortgage is a type of fixed mortgage in which the amortization schedule provides lower monthly payments in the beginning and then increases over time. These types of loans are best for the young lawyers or doctors who are at the start of their career. Initially their income is low but it increases with time.
Total costs over the life of a GPM loan tend to be greater than of a standard mortgage. A Graduated Mortgage Loan may or may not be a negative amortization loan. Graduated payment mortgages are only available on loans from the Federal Housing Administration.
Related Topics: Loan Limits on Types of Loans What are Conforming and Non Conforming Loans What is "Assumable loan"? A Fixed Rate Mortgage
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