Graduated Payment Mortgage Program
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Graduated Payment Mortgage Program
A graduated payment mortgage, or GPM, comes with monthly payments that start small, but increase over time and eventually stabilize. Graduated payment mortgages often carry deferred interest at first meaning your balance grows. However, you’ll still pay off the loan within the set term. You’ll typically find that graduated payment loan options are backed by the Federal Housing Administration (FHA).
We generally divide mortgages into two groups: those with a fixed rate and set monthly payments; and those with an adjustable rate and variable monthly payments. A graduated payment mortgage, or GPMs, combines elements of both: a fixed rate but variable, or graduated, payments. GPMs are self-amortizing loans, meaning you’ll completely pay off the debt at the end of the loan term. They are typically an FHA product (sometimes referred to as a Section 245 loan), which requires the borrower to pay upfront and annual mortgage insurance premiums.
What happens to the monthly payments after they stabilize in a Graduated Payment Mortgage (GPM)?
How does the upfront and annual mortgage insurance premium work with GPMs?
Call Today to discuss your options.
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