 Sam
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 Posted: Fri Apr 09, 2004 3:28 am Post subject: What is Payment Change Date? |
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The monthly mortgage payments often change during the term of the loan. This may be due to the type of the mortgage taken or on account of any changes made by the lender.
Adjustable rate mortgages (ARM) and graduated payment mortgages (GPM) are home loans that undergo frequent variation in the monthly payments. Often, monthly payments on fixed rate mortgages may fluctuate due to changes in tax payments and insurance premiums.
The date on which the monthly payment changes for an ARM or a GPM is the payment change date. It is from this date itself that a new amount is due from the borrower. In case of an ARM, the payment change date is provided in the note. The date must fall in the month just after the adjustment in the interest rate.
The payment changes in the ARMs are mainly due to variation in interest rates that are adjusted within a specified interval of time. Such changes depend upon the indexed rate and the margin available with the ARM. On the other hand, the GPM requires low payments initially, but the amount increases after a predetermined time period. The monthly payments are later on made higher in order to catch up with the low initial payments. The GPM payment plans vary on the basis of rate of payment increases, and the time period over which the payments go higher. |
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