Resources > Glossary > Graduated Payment Mortgage

Glossary of Notary Public, Mortgage, Signing Agent, and Loan Signing Terms.

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Graduated Payment Mortgage

Function: noun

A Graduated Payment Mortgage is a mortgage where payments start low and rise over time. The negative amortization is added to the balance of the loan. A buydown mortgage is somewhat similar to a Graduated Payment Mortgage, except for the fact that a Buydown Mortgage doesn't involve negative amortization. A Graduated Payment Mortgage is different from an Adjustable Rate Mortgage because the payment amounts in a Graduated Payment Mortgage are predetermined and fixed, while an Adjustable Rate Mortgage's payments could fluctuate with interest rates which are not predictable or predetermined.