If you are a young professional in today’s market, you may be interested in acquiring your first home. You may also realize the hassle of living to get approved for a loan in this economy where employers can name whatever price they want due to a shortage of jobs.
However, young professionals have more options than they might initially assume. One of these is called a gradual payment mortgage, or GPM for short.
A gradual payment mortgage offers you the opportunity to make lower payments initially at the beginning of the mortgage term. Over time, these monthly payments will be higher. You can think of this loan as a kind of negative amortization. A gradual payment mortgage makes it possible for people who would not otherwise have the financial capabilities to purchase a home, as it is aimed primarily at young professionals. While you don’t currently earn enough to make full monthly mortgage payments under a conventional loan scheme, this mortgage is often granted under the notion that an aspiring professional will eventually make more money in the future.
Apparently, as the young professional also progresses in his work, the monthly mortgage payments are likely to increase as a consequence of a few years. Law or medical students are perfect candidates for this mortgage. While in school, these young professionals may not be able to pay the traditional month-to-month mortgage. The assumption is that jobs are plentiful and only waiting for the newly graduated professionals in these industries. Consequently, once they graduate and are employed, they will be able to pay a higher monthly payment amount for the home they bought.
In this way, both lenders and young professionals benefit from the gradual payment mortgage option. Lenders are offered reasonable assurance that borrowers will have the ability to make recurring payments over a required period of time. Young professionals, on the other hand, have the opportunity to become homeowners sooner than they would have, considering their current financial situation while still in school. Ultimately, both parties benefit from a mortgage plan like this, making it an excellent choice when it comes to mortgage options.