Call Today
770-472-7533
HOME | ABOUT US | CONTACT US
Call Today
770-472-7533
HOME | ABOUT US | CONTACT US

PURCHASE LOANS FHA, VA, Conventional, FHA 203-k, Hud Homes, 2nd Homes and Investment property. We can help.

REFINANCE LOANSHarp, Du Refi Plus, FHA streamline (owner & investment) VA, Investment. Let us help.

OUR PROGRAMS Let us guide you through the home buying or refinancing process and finding the right program.

 
 
mortgage
Use our calculators to see if you can afford your dream home.

PURCHASE LOANS FHA, VA, Conventional, FHA 203-k, Hud Homes, 2nd Homes and Investment property. We can help.

REFINANCE LOANSHarp, Du Refi Plus, FHA streamline (owner & investment) VA, Investment. Let us help.

OUR PROGRAMS Let us guide you through the home buying or refinancing process and finding the right program.

 
 
mortgage
Use our calculators to see if you can afford your dream home.

Graduated Payment Mortgage (GPM)

The GPM is another alternative to the conventional adjustable rate mortgage, and is making a comeback as borrowers and mortgage companies seek alternatives to assist in qualify for home financing.

Unlike an ARM, GPMs have a fixed note rate and payment schedule. With a GPM the payments are usually fixed for one year at a time. Each year for five years the payments graduate at 7.5% - 12.5% of the previous years payment.

GPMs are available in 30 year and 15 year amortization, and for both conforming and jumbo loans. With the graduated payments and a fixed note rate, GPMs have scheduled negative amortization of approximately 10% - 12% of the loan amount depending on the note rate. The higher the note rate the larger degree of negative amortization. This compares to the possible negative amortization of a monthly adjusting ARM of 10% of the loan amount. Both loans give the consumer the ability to pay the additional principal and avoid the negative amortization. In contrast, the GPM has a fixed payment schedule so the additional principal payments reduce the term of the loan. The ARMs additional payments avoid the negative amortization and the payments decrease while the term of the loan remains constant.

The scheduled negative amortization on a GPM differs depending on the amortization schedule, the note rate and the payment increases of the loan. GPM loans with 7.5% annual payment increases offer the lowest qualifying rate but the largest amount of negative amortization.

Contact your mortgage professional for additional information and program availability.

The note rate of a GPM is traditionally .5% to .75% higher than the note rate of a straight fixed rate mortgage. The higher note rate and scheduled negative amortization of the GPM makes the cost of the mortgage more expensive to the borrower in the long run. In addition, the borrowers monthly payment can increase by as much as 50% by the final payment adjustment.

The lower qualifying rate of the GPM can help borrowers maximize their purchasing power, and can be useful in a market with rapid appreciation. In markets where appreciation is moderate, and a borrower needs to move during the scheduled negative amortization period they could create an unpleasant situation.

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 Ga. Residential Mortgage #31466

 Ga. Residential Mortgage #31466

Home Loan Pros, Inc.
NMLS: 397243
2011 Commerce Dr F-113
Peachtree City, Ga 30269
Privacy | Terms | Contact Us | Home

Home Loan Pros, Inc.
NMLS: 397243
2011 Commerce Dr F-113
Peachtree City, Ga 30269
Privacy | Terms | Contact Us | Home


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