Graduated-Payment Mortgages (GPMs)

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Graduated-Payment Mortgages (GPMs)
A sequential payment loan wherein the installments paid by borrower are initially lower when compared with a peer group interest rate mortgage. The installments gradually increase over a specified number of years, usually, 3 to 7 years. Then they are fixed at a level pay schedule. This is higher than the payables on a level-pay mortgage that originated in the same period. The divergence between the actual payment by borrower and the amount that will need to be paid to fully amortize the loan is included in the principal outstanding.

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