Call us today at (702) 838-9922
or toll free at (844) 740-4007

Lone Mortgage
5275 S Durango Dr
Las Vegas Nevada, 89113
NMLS #328524
Need Mortgage Help? 702-838-9922

Graduated Payment Mortgages

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.

LenderHomePage Powered By LenderHomePage.com