Growing Equity Mortgage

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Growing Equity Mortgage (GEM)

Mortgage with a fixed interest rate and payments that increase throughout the term of the mortgage.

Growing Equity Mortgage

A mortgage with a fixed interest rate and monthly payments that increase over time, at least up to a certain amount. The increased payments go toward paying down the principal on the mortgage. A growing equity mortgage allows the mortgage holder to shorten the period of the mortgage with the increased payments. A GEM makes the most sense if the home owner expects to increase his/her income over the life of the mortgage.

growing equity mortgage (GEM)

A home loan arrangement in which the payments are increased each year by a specific amount,with the additional money credited to additional principal reduction. As a result, the loan is paid in full earlier than the normal amortization period.The FHA-
insured GEM program is called a 245(a) loan.