Graduation Rate
The percentage increase in the monthly payment on a graduated payment mortgage. The increase occurs at set intervals, usually annually. The interest rate on a graduated payment mortgage is fixed for the life of the loan. The initial monthly payments are set below a fully amortizing payment, and increase at the graduation rate over the graduation period until the payment becomes large enough to amortize the mortgage over its remaining term. Investopedia Says:
Graduated payment mortgages are similar to payment option ARMs in that both will likely have negative amortization. However, unlike a payment option ARM, the exact payments and amount of negative amortization can be known for certain on a graduated payment mortgage. Related Terms:
Deferred Interest
Graduated Payment Mortgage
Graduation Period
Negative Amortization |