A graduated payment mortgage (GPM) enables the borrower to have lower payments earlier in the mortgage and increased payments later on. The assumption is the borrower’s income will increase over time so that it will be easier for the borrower to meet all payments. Suppose you borrow $150,000 on a 30-year monthly mortgage. You obtain a GPM where monthly payments increase 6% per year through year 5 and then remain constant from year 5 through year 30. For annual interest rates of 2%, 3%, 4%, 5%, and 6%, use Solver to find the amount of each year’s monthly payment.
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
A graduated payment mortgage (GPM) enables the borrower to have lower payments earlier in the mortgage and increased payments later on. The assumption is the borrower’s income will increase over time so that it will be easier for the borrower to meet all payments. Suppose you borrow $150,000 on a 30-year monthly mortgage. You obtain a GPM where monthly payments increase 6% per year through year 5 and then remain constant from year 5 through year 30. For annual interest rates of 2%, 3%, 4%, 5%, and 6%, use Solver to find the amount of each year’s monthly payment.
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