A graduated payment mortgage is a loan where the payment increases each year for a predetermined amount of time (such as 5 or 10 years), then becomes fixed for the remaining duration of the loan.
When interest rates are high, borrowers can use a graduated payment mortgage to increase their chances of qualifying for the loan because the initial payment is less. The downside of opting for an smaller initial payment is that the interest owed increases and the payment shortfall from the initial years of the loan is then added on to the loan, potentially leading to a situation called "negative amortization." Negative amortization occurs when the loan payment for any period is less than the interest charged over that period, resulting in an increase in the outstanding balance of the loan.
America Lending is committed to helping you find the right mortgage program. We offer a variety of programs to meet your individual needs.
Company NMLS: 372121
Licensed by PA Department of Banking and Securities
Licensed by New Jersey Department of Banking and Insurance
Licensed by Florida Office of Financial Regulations
2337 Philmont Ave Suite 206
Huntingdon Valley, Pennsylvania 19006
Phone: (800) 795-7521