Feature Image: Need To Know About What is Growing Equity Mortgage or GEM

Need To Know About Growing Equity Mortgage or GEM?

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Understanding the process of loans or mortgages can get tricky at times. It is imperative to understand what kind of loan or mortgage you are going to borrow from the bank or the moneylender. There are a variety of mortgages that banks or money lenders offer. There are slight changes every here and there. So make sure that you are being absolutely transparent regarding any doubts while taking a loan or mortgage.

There are a number of ways through which you can repay the bank. You can stick to the premiums, you can pay a lump sum amount to the bank and end your loans, or else you can go for a graduated-payment mortgage or also through Growing-Equity Mortgage.

What is Growing-Equity Mortgage or GEM?

While taking a loan, when you apply for Growing-Equity Mortgage or GEM, you agree that the price of premiums will increase after a certain amount of time. It could be raised after a year or after two or three years, based on what was the agreed term while borrowing the money.

Growing-Equity Mortgage or GEM actually helps to escalate the repayment process of the loan. Again, keep in mind that the profit margin or percentage remains the same for the bank. The growing price of premiums helps to clear out the loan faster and generates a positive amortization.

The first premium in the Growing-Equity Mortgage or GEM will be a completely amortizing one. As the price increases after the agreed-upon term, it is an added price that will help repay the loan faster.

How is a Graduated payment mortgage different from a Growing-Equity Mortgage?

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In both, Graduated payment mortgage and Growing-Equity Mortgage, the price of the premiums will increase after a certain approved span of time. But in a Graduated payment mortgage, the first premium is lesser than the completely amortizing payment. This creates a negative amortization, which in turn increases the profit for the lender or bank.

Meanwhile, in Growing-Equity Mortgage or GEM, the first premium is complete amortizing payment. It saves money and time, also minimizing any chance of increased profit for the lender or bank.

Which things to keep in mind while applying for Growing-Equity Mortgage or GEM?

As said before, the price of the premiums increases in Growing-Equity Mortgage. You have to always make sure about a few things before applying for this kind of mortgage.

1) Have a vision for the future. Make sure that you will grow in the following years to deal with the premiums.

2) Make sure that your payment increases. You have to take out your premiums, household finances, and money for emergencies just in case.

3) Always try to save money. Every bit of money saved can be used in such crunch situations.

4) To apply for loan insurance.

5) Check the guidelines for the Federal Housing Administration. They offer a number of Growing-Equity Mortgage loans for people with limited income.

6) Keep an eye on your investments. If you have invested in stocks, try to hold them until you get maximum profits out of them.

Which things to keep in mind while applying for such loans?

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Loans can get tricky at times. Always make sure that you’re getting the correct knowledge from the loan representatives or lenders. Your money is at stake, your house is at stake, so always make sure to be as thorough as possible before applying for any kind of loans or mortgages. Read the loan agreement and forms carefully. Think and calculate at what term you will be able to pay the increased amount of premiums if you are applying for a Growing-Equity Mortgage.

What to do if you have any queries or issues with your premiums or loans when applying for the Growing-Equity Mortgage?

It is no rocket science that you might have questions about a lot of things before or after taking a loan. So here are a few things you can do to get your queries resolved and get help if you face any issues with your loans-

1) Contact the customer service team. They are dedicated to helping you and resolving your queries and issues all the time. You just need the correct number which you will usually find in your loan agreements or contracts.

2) Visit the nearby loan branch. On any working day, you will find a number of representatives who will be more than happy to help and resolve your queries and issues. It is their job to provide you with correct information and avoid any misunderstandings.

3) The statements in an agreement are often hard to understand for a layman. Do not hesitate to ask the representatives to be more informative or to break the information into simple terms for you.

Last but not the least, keeping a healthy loan repayment helps to increase your credit score and build better relationships with the banks.

See Also…

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