Graduated payment mortgages (GPMs) are a type of home loan with payments that start smaller and get larger as time goes on. These kind of mortgages have a fixed interest rate, and the payments often increase between 7-12% each year until a maximum payment amount is reached, which will continue for the rest of the life of the loan. Most GPMs are insured by the Federal Housing Administration (FHA).
Read MoreFirst and foremost, it is imperative to remember that you ultimately choose your mortgage lender, which means, there are choices – and the lender has the primary impact on the charges tacked on to your closing costs. This fact is advantageous to the buyer and should be used as a tool to compare estimated closing costs that lenders detail in the Loan Estimate.
Read MoreMany of us are familiar with amortization and fully amortizing loans. But not all amortized loans are fully amortizing. There are actually a subset of loans that are partially amortizing. These loans are not especially common in the home loan market, but they do exist.
Read MoreAmortization refers to a type of payment schedule that some home loans utilize. The payment schedule is made up of equal payment amounts that are stretched over a designated amount of time (the loan term). For the purpose of an amortization schedule, each payment is divided into two portions. There is a portion that is made up of interest (the cost of the loan), and a portion that is made up of principal (the value of the borrowed sum).
Read MoreAmortized home loans have been the mainstream payment method for mortgages for a long time. They were introduced to the housing market thanks to intervention from the Federal Housing Administration (FHA), which led to the formation of a fully amortizing 30-year fixed rate home loan.
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