Realty411 Magazine A Spotlight on Charles and Lena Sells | Page 14
14) “Graduated Payment Mortgage (GPM)” – is a
note engineered such that interest and/or payments
start low, then increase gradually over the years. It
makes for easier ownership but can become a trap
in the later years. For this reason, the DoddFrank
legislation prohibits this type of loan on 14 unit
owneroccupied properties, but it is still legal for
investment property transactions of all kinds.
Conclusion
Clearly, these note terms are not appropriate for every
transaction, nor would sellers agree to all of them. The
objective is for buyers to negotiate as many that are
advantageous as they can!
Good luck!
Bruce Kellogg has been a Realtor® and investor
for 36 years. He has transacted about 500 properties
for clients, and about 300 properties for himself in 12
California counties. These include 14 units, 5+
apartments, offices, mixeduse buildings, land, lots,
mobile homes, cabins, and churches. He is available
for listing, selling, consulting, mentoring, and
partnering. Reach him at [email protected], or
(408) 4890131.!
15) “Shared Appreciation Mortgage (SAM)” – is a
popular note term when prices are high and still
rapidly rising, or when interest rates are high. The
note is written so that the seller receives payments
that are “submarket”, but also receives a
percentage of the property’s appreciation upon sale
or maturation of the note. It is useful, but not very
common.
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