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Growing-Equity Mortgage
A growing-equity mortgage is a type of mortgage that offers a gradual increase in the monthly payment. The difference between the original monthly payment amount and the increased payment is applied directly towards the principal balance. As the name states, the equity grows on this type of mortgage because the proceeds from the increased payment amount helps to pay down the principal balance quicker. The schedule for increased payments vary on growing-equity mortgages. Borrowers can inquire with the lender to find out the specific length of time in between increased payment amounts. Additionally, a growing-equity mortgage is a fixed rate mortgage, so borrowers do not need to factor in the possibility of a higher interest rate throughout the life of the loan. This type of loan is ideal for consumers who wish to pay off the mortgage sooner than the typical 30-year term.