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What is a Graduated Payment Mortgage?
Graduated Payment Mortgage:
A mortgage in which the payments gradually increase for a period of time
until they reach a predetermined amount and then remain fixed for the
duration of the loan.

The amount of the initial payment is not sufficient to eventually pay off the
loan or even make an interest only payment.

Since the initial payment is too low to totally pay the interest as it come
due, the unpaid interest is added to the mortgage loan amount, resulting in
an increasing mortgage debt for the borrower... This is called negative
amortization.


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