Finance:Graduated payments
Graduated payments are repayment terms involving gradual increases in the payments on a closed-end obligation. A graduated payment loan typically involves negative amortization, and is intended for students in the case of student loans,[1] and homebuyers in the case of real estate,[2] who currently have moderate incomes and anticipate their income will increase over the next 5–10 years. All Federal Housing Administration (FHA) lenders can offer a FHA Graduated payment mortgage loan, which begin with a lower monthly payment that increases annually over the first 5–10 years of the loan, and then it levels out to a fixed monthly payment for the remaining years of the mortgage. There are five FHA Graduated Payment Mortgages offered in 15-year and 30-year terms. The difference between the plans lies in the rate of increase of the mortgage payment, which annually increases 2.5%, 5%, or 7.5% until it levels off.[3]
References
- ↑ "Which Student Loan Repayment Plan Should You Choose?". U.S. News & World Report. http://money.usnews.com/money/blogs/my-money/2013/09/20/which-student-loan-repayment-plan-should-you-choose.
- ↑ "Graduated Mortgage Payments". Marimark Mortgage. http://www.marimarkmortgage.com/blog/fha-loans/graduated-mortgage-payments.
- ↑ "FHA Graduated Payment Mortgages". FHA.com. http://www.fha.com/graduated_payment.
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