It is a type of flexible mortgage where the payments increase for a specified period of time and then level off. What is it?
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A. B. C. D.B
The correct answer is B. Graduated payment mortgage (GPM).
A GPM is a type of flexible mortgage where the payments start off low and gradually increase over a specified period of time before leveling off. This allows the borrower to start off with lower payments during the initial years of the mortgage, when their income may be lower, and then gradually increase their payments as their income grows.
The increasing payments are usually set to a specific schedule, which is predetermined by the lender. The schedule typically spans 5 to 10 years, after which the payments will level off at a fixed amount for the remainder of the loan term.
It's worth noting that a GPM can be a good option for borrowers who expect their income to increase steadily over the years, but may not be suitable for everyone. Borrowers who are uncertain about their future income or who expect their income to remain relatively stable may want to consider other mortgage options.
In summary, a GPM is a flexible mortgage that allows borrowers to start off with lower payments before gradually increasing them over a specified period of time. The payments then level off for the remainder of the loan term.