mortgage loan in which the payment is increased by a specific amount each year, with the additional payment amount applied to principal retirement. As a result of the added principal retirement, the maturity of the loan is significantly shorter than for a comparable level-payment mortgage.
a mortgage loan in which the payment is increased by a specific amount each year, with the additional payment amount applied to principal retirement. As a result of the added principal retirement, the maturity of the loan is significantly shorter than a comparable level-payment mortgage.
Example: Long purchased her home with a growing-equity mortgage. Long's monthly payments will increase by 5% each year, with the increased amount applied to principal. Long will retire the loan in about half the time required to retire a comparable loan with fixed payments.
