Graduated Payment Mortgages

A graduated payment mortgage is a loan where the payment increases each year for a predetermined amount of time (such as 5 or 10 years), then becomes fixed for the remaining duration of the loan.

When interest rates are high, borrowers can use a graduated payment mortgage to increase their chances of qualifying for the loan because the initial payment is less. The downside of opting for an smaller initial payment is that the interest owed increases and the payment shortfall from the initial years of the loan is then added on to the loan, potentially leading to a situation called “negative amortization.” Negative amortization occurs when the loan payment for any period is less than the interest charged over that period, resulting in an increase in the outstanding balance of the loan.


Select a Loan Officer

Laura Contreras

(562) 587-7440
NMLS #262280

Tom Duncan

(707) 344-1400
NMLS #1994086

Tina Gomez

(714) 713-2836
NMLS #1473848

Aaron Zapata

(949) 409-9229 ext. 1001 NMLS #1600847